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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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AMERICAN MAIZE-PRODUCTS COMPANY
(NAME OF SUBJECT COMPANY)
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AMERICAN MAIZE-PRODUCTS COMPANY
(NAME OF PERSON(S) FILING STATEMENT)
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CLASS A COMMON STOCK, PAR VALUE $0.80 PER SHARE
(TITLE OF CLASS OF SECURITIES)
027339 20 9
(CUSIP NUMBER OF CLASS OF SECURITIES)
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CLASS B COMMON STOCK, PAR VALUE $0.80 PER SHARE
(TITLE OF CLASS OF SECURITIES)
027339 30 8
(CUSIP NUMBER OF CLASS OF SECURITIES)
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ROBERT M. STEPHAN, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
AMERICAN MAIZE-PRODUCTS COMPANY
250 HARBOR DRIVE
STAMFORD, CONNECTICUT 06902
(203) 356-9000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH A COPY TO:
MORTON A. PIERCE, ESQ.
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6092
(212) 259-8000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is American Maize-Products Company, a Maine
corporation (the "Company"). The address of the principal executive offices of
the Company is 250 Harbor Drive, Stamford, Connecticut 06902. This statement
relates to the Company's Class A Common Stock, par value $0.80 per share (the
"Class A Common Stock"), and the Company's Class B Common Stock, par value $0.80
per share (the "Class B Common Stock" and, together with the Class A Common
Stock, the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer made by Cerestar USA, Inc.
("Merger Sub"), a Delaware corporation and an indirect wholly-owned subsidiary
of Eridania Beghin-Say, S.A., a corporation organized under the laws of France
("Purchaser"), disclosed in a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") dated February 28, 1995, to purchase all outstanding Shares at
$40.00 per Share, net to the seller in cash (the "Offer"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated February 28,
1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer Documents").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 22, 1995, among the Company, Purchaser and Merger Sub (the
"Merger Agreement"), which provides for the making of the Offer by Merger Sub,
subject to the conditions and upon the terms of the Merger Agreement, and for
the subsequent merger of Merger Sub with and into the Company (the "Merger").
The Schedule 14D-1 states that the principal executive offices of Purchaser
are located at 54 avenue Hoche, 75008 Paris, France and the principal executive
offices of Merger Sub are located at 1300 Fort Wayne National Bank Building,
Fort Wayne, Indiana 46802.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements and understandings between
the Company and certain of its executive officers, directors and affiliates are
described in Annex A hereto, which description is incorporated herein by
reference in its entirety.
Certain other contracts, agreements and understandings between the Company
and its directors, executive officers and affiliates and between the Company,
Purchaser and Merger Sub are set forth below:
(i) MERGER AGREEMENT. On February 22, 1995, the Company, Purchaser and
Merger Sub entered into the Merger Agreement. The following discussion of the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, does not purport to be complete and is qualified in its entirety
by reference to the text of the Merger Agreement, a copy of which has been filed
as Exhibit (l) hereto and is incorporated herein by reference. Defined terms
used below and not defined herein have the respective meanings assigned to those
terms in the Merger Agreement.
The Offer. The Merger Agreement provides that Merger Sub will commence the
Offer and, subject to the terms of the Offer, Purchaser shall accept for payment
and pay for Shares which have been validly tendered pursuant to the Offer at a
price of $40.00 per Share, net to the seller in cash (the "Merger
Consideration"), promptly after expiration of the Offer. Purchaser may not,
without the prior written consent of the Company, (a) decrease the Merger
Consideration, (b) decrease the number of Shares to be purchased in the Offer,
(c) change the form of consideration payable in the Offer, (d) add to or change
the conditions of the Offer, (e) change or waive the Minimum Condition (as
defined below) or (f) make any other change in the terms or conditions of the
Offer which is adverse to the holders of the Shares.
If all of the conditions to the Offer are satisfied as of the scheduled
expiration date thereof, the Offer may not be extended without the prior written
consent of the Company. If as of the scheduled expiration date of the Offer the
conditions to the Offer have not been satisfied but are capable, using
reasonable efforts, of being
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satisfied within 90 days of the commencement of the Offer or waived by Purchaser
or Merger Sub, Purchaser shall extend the Offer until the earliest of (i) the
purchase of Shares pursuant to the Offer, (ii) 90 days from the commencement of
the Offer and (iii) the termination of the Merger Agreement.
Conditions to the Offer. The Merger Agreement provides that Merger Sub
will not be obligated to accept for payment any Shares tendered until the
expiration of all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and Merger Sub
shall not be required to accept for payment or pay for any Shares, or may delay
the acceptance for payment of or payment for, any Shares tendered, or may, in
its sole discretion, subject to the terms and conditions of the Merger
Agreement, terminate or amend the Offer as to any Shares not then paid for, if
(A) there have not been validly tendered prior to the expiration of the Offer
and not withdrawn, (i) a number of shares of Class A Common Stock which,
together with the number of shares of Class A Common Stock then beneficially
owned by Purchaser and its affiliates, constitute at least a majority of the
outstanding shares of Class A Common Stock on a fully-diluted basis and (ii) a
number of shares of Class B Common Stock which, together with the number of
shares of Class B Common Stock which Purchaser or its affiliates have purchased
or are then obligated to purchase under the Stock Purchase Agreement (all
conditions to the obligations of the parties under the Stock Purchase Agreement
(other than the completion of the Offer) having been satisfied) and the number
of shares of Class B Common Stock then beneficially owned by Purchaser and its
affiliates, constitute at least a majority of the outstanding shares of Class B
Common Stock on a fully-diluted basis (the "Minimum Condition") or (B) at any
time on or after February 22, 1995, and at or prior to the time of payment for
any such Shares, (whether or not any Shares have heretofore been accepted for
payment pursuant to the Offer) any of the following events shall have occurred
and be continuing:
(a) there shall have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on any United
States national securities exchange or over-the-counter market, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or France, (iii) the commencement of
a war, armed hostilities or other international or national calamity
directly or indirectly involving the United States having a material
adverse effect on the functioning of the financial markets in the United
States (iv) any limitation (whether or not mandatory) by any governmental
or regulatory authority, agency, commission or other entity, domestic or
foreign ("Governmental Entity"), on, or any other event having a material
adverse effect on, the extension of credit by banks or other lending
institutions in the United States or France, (v) any suspension of, or
material limitation (whether or not mandatory) on, the currency exchange
markets or the imposition of, or material changes in, any currency or
exchange control laws in the United States or France, or (vi) in the case
of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or
(b) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Merger Agreement or the Stock Purchase Agreement or any representation or
warranty of the Company set forth in the Merger Agreement or the Stock
Purchase Agreement shall have been untrue or incorrect when made or
thereafter shall become untrue or incorrect, except where such breach,
failure to perform or lack of truthfulness or correctness has been caused
by or results from a breach by Purchaser or Merger Sub of any of their
obligations under the Merger Agreement or the Stock Purchase Agreement; or
(c) there shall have been instituted or be pending any action,
litigation or proceeding before any court or governmental, regulatory or
administrative agency, authority or commission, domestic or foreign, which
(i) challenges the acquisition by Purchaser or Merger Sub of the Shares, or
seeks to restrain, materially delay or prohibit the Offer, the Merger, the
Stock Purchase Agreement or other subsequent business combination or seeks
material damages in connection therewith; (ii) seeks to prohibit or
materially limit the ownership or operation by Purchaser, Merger Sub or
their affiliates and subsidiaries of any material portion of the business
or assets of the Company (including the business or assets of their
respective affiliates and subsidiaries), taken as a whole, or of Purchaser
or Merger Sub (including the business or assets of their respective
affiliates and subsidiaries) taken as a whole, in each case as a result of
the transactions contemplated by the Merger Agreement and the Stock
Purchase Agreement;
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(iii) seeks to impose material limitations on the ability of Purchaser or
Merger Sub (including the business or assets of their respective affiliates
and subsidiaries) to hold or to exercise full rights of ownership of the
Shares, including without limitation the right to vote any Shares purchased
by them on an equal basis on all matters properly presented to the holders
of such class of Shares; or
(d) there shall have been any action taken, or any statute, rule,
regulation, order or injunction sought, proposed, enacted, promulgated,
entered, enforced or deemed applicable to the Offer, the Merger or the
Stock Purchase Agreement (other than the application of the waiting period
provisions of the HSR Act), which would result in any of the consequences
referred to in clauses (i) through (iii) of paragraph (c) above; or
(e) it shall have been publicly disclosed or Purchaser shall have
learned that any person, entity or "group" (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder, the "Exchange Act") shall have become the beneficial owner (as
defined in Section 13(d) of the Exchange Act and the rules promulgated
thereunder) of more than 25% of any class or series of capital stock of the
Company (including any class of the Shares), (other than acquisitions by
persons or groups who have publicly disclosed such ownership on or prior to
February 22, 1995 in a Schedule 13D or 13G (or amendments thereto on file
with the SEC); or
(f) the Board of Directors of the Company shall have amended modified
or withdrawn its recommendation of the Offer or the Merger, or shall have
failed to publicly reconfirm such recommendation upon request by Purchaser
or Merger Sub or shall have endorsed, approved or recommended any other
Acquisition Proposal (as defined below), or shall have resolved to do any
of the foregoing; or
(g) the Company and Purchaser or Merger Sub shall have reached an
agreement or understanding that the Offer be terminated or amended, or that
payment for the Shares be delayed; or
(h) the Dow Jones Industrial Average (as reported by The Wall Street
Journal) shall have lost 20% or more of the value it had at the date of the
Merger Agreement; or
(i) any other Regulatory Filings (as defined in Section 6.1(d) of the
Merger Agreement) and consents applicable to the Offer or the Stock
Purchase Agreement shall not have been obtained on terms and conditions
reasonably satisfactory to Purchaser or Merger Sub, or if Purchaser shall
have received notice under the Exon-Florio Amendment (as defined in Section
6.1(d) of the Merger Agreement) that the Committee on Foreign Investment in
the United States has determined to investigate the Offer or any related
transaction;
which, in any such case, and regardless of the circumstances (including any
action or inaction by Purchaser or Merger Sub other than a breach by Purchaser
or Merger Sub of the Merger Agreement or the Stock Purchase Agreement) giving
rise to any such conditions, makes it inadvisable to proceed with the Offer
and/or with such acceptance for payment of or payment for Shares.
The Board. The Merger Agreement provides that, upon request of Purchaser,
the Company shall, subject to compliance with applicable law and promptly
following the purchase by Merger Sub of more than 50 percent of the outstanding
shares of Class A Common Stock and more than 50 percent of the outstanding
shares of Class B Common Stock pursuant to the Offer, the Stock Purchase
Agreement or otherwise, take all actions necessary to cause persons designated
by Purchaser to become directors of the Company so that the total number of such
persons equals that number of directors, rounded up to the next whole number,
which represents (i) the product of (w) the total number of directors on the
Board of Directors the shares of Class A Common Stock are entitled to elect
multiplied by (x) the percentage that the number of shares of Class A Common
Stock so accepted for payment plus any shares of Class A Common Stock
beneficially owned by Purchaser or its affiliates on the date of the Merger
Agreement bears to the number of shares of Class A Common Stock outstanding at
the time of such acceptance for payment plus (ii) the product of (y) the total
number of directors on the Board of Directors the shares of Class B Common Stock
are entitled to elect multiplied by (z) the percentage that the number of shares
of Class B Common Stock so accepted for payment plus any shares of Class B
Common Stock beneficially owned by Purchaser or its affiliates on the date of
the Merger Agreement bears to the number of shares of Class B Common Stock
outstanding at the
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time of such acceptance for payment. In furtherance thereof, the Company shall
increase the size of the Company's Board of Directors, or use its best efforts
to secure the resignation of directors, or both, as is necessary to permit
Purchaser's designees to be elected to the Company's Board of Directors;
provided, however, that prior to the Effective Time (as defined in Section 2.3
of the Merger Agreement), the Company's Board of Directors shall always have at
least two members who are neither officers of Purchaser or the Company (or any
of their respective affiliates) nor designees of Purchaser (or any of its
affiliates), nor shareholders or affiliates of Purchaser, nor beneficial owners
of 5% or more of any class of capital stock of the Company (or any of their
respective affiliates) ("Insiders"). At such time, the Company, if so requested,
will use its best efforts to cause persons designated by Purchaser to constitute
the same percentage of each committee of such board, each board of directors of
each subsidiary of the Company and each committee of each such board (in each
case to the extent of the Company's ability to elect such persons).
For purposes of provisions of the Merger Agreement relating to termination
of the Merger, modification or amendment of the Merger Agreement, or waiver of
conditions to the Company's obligations to consummate the Merger, no action
taken by the Board of Directors of the Company prior to the Merger shall be
effective unless such action is approved by the affirmative vote of at least a
majority of the directors of the Company who are not Insiders.
The Company's obligations to appoint designees to the Board of Directors
will be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
In this regard, the Company has prepared and is filing with the Securities and
Exchange Commission (the "SEC") in connection herewith an Information Statement,
a copy of which is attached as Annex A to this Schedule 14D-9 and which is
incorporated herein by reference.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions contained therein, at the Effective Time Merger Sub will be merged
with and into the Company and the separate corporate existence of Merger Sub
will thereupon cease. The Company will be the surviving corporation in the
Merger (the "Surviving Corporation") and the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger, except that the Certificate of Incorporation
of Merger Sub in effect at the Effective Time will be the Certificate of
Incorporation of the Surviving Corporation and the By-Laws of Merger Sub in
effect at the Effective Time shall be the By-Laws of the Surviving Corporation.
The directors of Merger Sub and the officers of the Company at the Effective
Time will, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-Laws.
As provided in the Merger Agreement, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Purchaser,
Merger Sub or any other subsidiary or affiliate of Purchaser, and other than
Dissenting Shares, as hereinafter defined) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive, without interest, an amount in cash equal to the Merger
Consideration or such greater amount which may be paid pursuant to the Offer.
Any Shares held by shareholders exercising appraisal rights pursuant to Section
909 of the Maine Business Corporation Act (the "MBCA") ("Dissenting Shares")
shall, by virtue of the Merger, be converted into the right to receive payment
from the Surviving Corporation of the "fair value" of such Shares as determined
in accordance with Section 909 of the MBCA. At the Effective Time, each share of
common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on the part
of Merger Sub or the holders of such shares, be converted into one share of
common stock of the Surviving Corporation.
The Merger Agreement provides that immediately prior to the Effective Time,
each option or right to acquire Shares or stock appreciation rights with respect
to the Shares ("SARs"), shall, without any action on the part of the holder
thereof, and whether or not then exercisable, be converted into the right to
receive an amount (subject to withholding tax) in cash, if any, equal to the
product of (x) the Merger Consideration minus the current option, acquisition or
base price per share of such option or right and (y) the number of Shares
subject to such option or right, payable to the holder thereof without interest
thereon, at the Effective
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Time of the Merger and such option or right will be cancelled and retired and
shall cease to exist. If and to the extent required by the terms of the plans
governing such options or rights or pursuant to the terms of any option or right
granted thereunder, the Company shall use all reasonable efforts to obtain the
consent of each holder of outstanding stock options or rights to the foregoing
treatment of such stock options or rights and to take any other action
reasonably necessary to effectuate the foregoing provisions. The Company shall
take all reasonably necessary action to provide that the Stock Plans (as defined
in Section 6.1(b) of the Merger Agreement) shall be terminated as of the
Effective Time.
The Merger Agreement provides that following the consummation of the Offer,
the Company will take, consistent with applicable law and its Articles of
Incorporation and By-Laws, all action necessary to duly call, give notice of,
convene and hold a meeting of holders of Shares as promptly as practicable to
consider and vote upon the approval of the Merger Agreement and the Merger. The
Company has agreed, subject to fiduciary requirements of applicable law, that
the Board of Directors of the Company will recommend such approval and the
Company will take all lawful action to solicit such approval. Purchaser has
agreed that at any such meeting of the Company all of the Shares then owned by
the Purchaser Companies (as defined in Section 5.1(a) of the Merger Agreement)
will be voted in favor of the Merger Agreement. At the election of Purchaser, if
Purchaser or Merger Sub owns after the expiration of the Offer at least 90% of
the outstanding Shares of each class of the Company's stock, Purchaser, Merger
Sub and the Company have agreed to effect the Merger without shareholder action
in accordance with Section 904 of the MBCA.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of Purchaser, Merger Sub and the Company, to consummate the Merger
are subject to the fulfillment or waiver, where permissible, of the following
conditions: (a) the requisite approval, if any, of the shareholders of the
Company; (b) Merger Sub (or one of the Purchaser Companies) having purchased
enough Shares pursuant to the Offer and the Stock Purchase Agreement sufficient
to satisfy the Minimum Condition; provided, however, that this condition will be
deemed satisfied with respect to Purchaser and Merger Sub if the Purchaser
Companies shall have failed to purchase Shares pursuant to the Offer or the
Stock Purchase Agreement in violation of the terms thereof; (c) the expiration
or termination of all waiting periods under the HSR Act applicable to the
Merger; and (d) the compliance in all material respects by the other party with
all agreements and obligations of such party under the Merger Agreement or the
Stock Purchase Agreement prior to the Effective Time. The obligations of
Purchaser and Merger Sub to consummate the Merger are further conditioned on no
statute, rule, regulation, judgment, decree, injunction or other order having
been enacted, issued, promulgated, enforced or entered by any court or
governmental entity which prohibits or materially restricts the consummation of
the transactions contemplated by the Merger Agreement or the Stock Purchase
Agreement, or materially restricts the business operations of Purchaser, Merger
Sub or the Company as a result of such transactions. The obligations of the
Company to consummate the Merger are further conditioned on no statute, rule,
regulation, judgment, decree or other order having been enacted, issued,
promulgated, enforced or entered by any court or governmental entity which
prohibits consummation of the Merger Agreement or the Stock Purchase Agreement
in accordance with the terms thereof.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties. Representations and
warranties of Purchaser and Merger Sub include, without limitation, certain
matters relating to their organization and qualification to do business, their
authority to enter into the Merger Agreement and the Stock Purchase Agreement
and to consummate the transactions contemplated thereby, their filings with the
SEC in connection with the Offer, consents and approvals required for the
execution and delivery of the Merger Agreement and the Stock Purchase Agreement
and the consummation of the transactions contemplated thereby and the
availability of funds sufficient to consummate the Offer, the Merger and the
transactions contemplated by the Stock Purchase Agreement on the terms
contemplated thereby.
Representations and warranties of the Company include, without limitation,
certain matters relating to its organization and qualification to do business,
capitalization, authority to enter into the Merger Agreement and the Stock
Purchase Agreement and to consummate the transactions contemplated thereby,
consents and approvals required for the execution and delivery of the Merger
Agreement and the Stock Purchase Agreement and the consummation of the
transactions contemplated thereby, filings with the SEC, the
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absence of certain changes since December 31, 1993, litigation and liabilities,
employee benefit matters, taxes, compliance with law, intellectual property,
labor, insurance and environmental matters.
Interim Operations of the Company. Pursuant to the Merger Agreement, the
Company has agreed that, prior to the date on which a majority of the Company's
directors are Purchaser Insiders (unless Purchaser otherwise agrees in writing
and except as otherwise contemplated by the Merger Agreement or the Stock
Purchase Agreement): (a) the business of the Company and its subsidiaries will
be conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its subsidiaries shall use all reasonable
efforts to preserve its business organization and goodwill intact, keep
available the services of its officers and employees as a group and maintain its
existing relations with customers, suppliers, distributors, employees and others
having business relationships with it, in each case in all material respects;
(b) the Company and its subsidiaries will not (i) sell or pledge or agree to
sell or pledge any stock owned by it in any of its subsidiaries, (ii) adopt or
propose any amendment or change of their respective Articles or By-Laws, (iii)
split, combine or reclassify the outstanding Shares, or (iv) declare, set aside
or pay any dividend payable in cash, stock or property with respect to the
Shares, except for regular quarterly cash dividends not in excess of $0.17 per
Share; (c) except as provided for in the disclosure schedules to the Merger
Agreement, neither the Company nor any of its subsidiaries will (i) issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible or exchangeable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class of
the Company or its subsidiaries or any other property or assets other than, in
the case of the Company, shares of Class B Common Stock issuable pursuant to the
terms of the Stock Purchase Agreement and shares of Class A Common Stock
issuable pursuant to options outstanding on the date of the Merger Agreement
under the Stock Plans, (ii) transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of or encumber any material assets or incur or modify any
indebtedness or other liability or issue any debt securities or securities
convertible into or exchangeable for debt securities or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any person, in each case other than in the ordinary and usual course of
business and in a manner consistent with past practice, (iii) acquire directly
or indirectly by redemption or otherwise any shares of the capital stock of the
Company, (iv) authorize or make capital expenditures in excess of $1,000,000
individually, (v) make any acquisition of assets (other than in the ordinary
course of business) or investment in the stock of any other person or entity, or
(vi) merge or consolidate with any other person; (d) except as provided for in
the disclosure schedules to the Merger Agreement, other than in the ordinary and
usual course of business consistent with past practice or pursuant to
obligations imposed by collective bargaining agreements, neither the Company nor
any of its subsidiaries will increase the compensation payable or to become
payable to its executive officers or employees, enter into any contract or other
binding commitment in respect of any such increase or grant any severance or
termination pay (other than pursuant to a Plan (as defined in Section 6.1(h) of
the Merger Agreement) or policy existing as of the date of the Merger Agreement)
to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company or such subsidiaries, and neither the
Company nor any of its subsidiaries will establish, adopt, enter into, make any
new grants or awards under or amend, any collective bargaining agreement or
Plan, except as required by applicable law, including any obligation to engage
in good faith collective bargaining, to maintain tax-qualified status or as may
be required by any Plan existing as of the date of the Merger Agreement; (e)
neither the Company nor any of its subsidiaries will settle or compromise any
material claims or litigation or, except in the ordinary and usual course of
business, modify, amend or terminate any of its material Contracts (as defined
in Section 6.1(d)(ii) of the Merger Agreement) or waive, release or assign any
material rights or claims, or make any payment, direct or indirect, of any
material liability of the Company or any subsidiary before the same becomes due
and payable in accordance with its terms; (f) neither the Company nor any of its
subsidiaries will take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice with respect
to accounting policies or procedures (including tax accounting policies and
procedures) and except as may be required by the SEC or the Financial Accounting
Standards Board; (g) neither the Company nor any of its subsidiaries will make
any material tax election or permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be cancelled or terminated without notice
to Purchaser, except in the ordinary and usual course of
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business; and (h) neither the Company nor any of its subsidiaries will authorize
or enter into an agreement to do any of the foregoing.
Employment Contracts and Employee Benefits. The Merger Agreement provides
that, from and after the Effective Time, Purchaser and the Surviving Corporation
will honor in accordance with their terms all existing individual employment,
severance, early retirement, deferred compensation, consulting and salary
continuation agreements listed and specifically denoted on the disclosure
schedules to the Merger Agreement between the Company and any of its
subsidiaries and any current or former officer, director, employee or consultant
of the Company or any of its subsidiaries. The Merger Agreement further provides
that, from the Effective Time through December 31, 1996, Purchaser will cause
the Surviving Corporation and its successors to provide the employees of the
Company and its subsidiaries with employee benefit plans and programs (other
than the Stock Plans) which in the aggregate are no less favorable in all
material respects than those provided to such employees on the date of the
Merger Agreement; provided, however, that the Surviving Corporation will not be
required to maintain any specific benefit plans or programs.
Purchaser has agreed to cause the Surviving Corporation to pay each person
employed at the Company's corporate headquarters in Stamford, Connecticut at the
consummation of the Offer whose employment is terminated by the Surviving
Corporation within one year following such consummation (other than termination
for cause) a lump-sum severance payment upon such termination equal to the
product of (x) one month of such employee's base salary at the time of
termination and (y) the number of full years of service such employee has
accumulated with the Company and the Surviving Corporation, up to a maximum of
12 years of service credit; provided that such severance provision shall not
apply to any employee who is eligible to receive a severance payment upon
termination by virtue of such employee's employment contract with the Company
and shall be reduced by any other severance payment due to the employee. The
Company has agreed that, prior to the Effective Time, the Company will amend its
Capital Accumulation Plan to provide that it shall not be permitted to invest in
Class A Common Stock or Class B Common Stock as of the Effective Time.
Acquisition Proposals. The Company has agreed that neither the Company nor
any of its subsidiaries will, and the Company will direct and use all reasonable
efforts to cause the respective officers and directors of the Company or its
subsidiaries and the employees, agents and representatives of the Company and
its subsidiaries (including, without limitation, any investment banker, attorney
or accountant retained by the Company or any of its subsidiaries) not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal or offer (including, without limitation, any proposal or
offer to shareholders of the Company) with respect to a merger, consolidation or
similar transaction involving, or any purchase of (a) all or any significant
portion of the assets of the Company or any of its significant subsidiaries
(American Maize-Products Decatur Inc., American Maize-Products Dimmit Inc. or
Swisher International, Inc.), (b) 25% or more of the outstanding shares of the
Class A Common Stock and/or the Class B Common Stock of the Company or (c) a
majority of the outstanding shares of the capital stock of the Company's
significant subsidiaries (any such proposal or offer, an "Acquisition Proposal")
or, except to the extent legally required for the discharge by the Company's
Board of Directors of its fiduciary duties as advised by outside counsel to the
Company, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal or enter into any agreement or understanding
with any other person or entity with the intent to effect any Acquisition
Proposal. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. The Company will use all
reasonable efforts to take all necessary steps to inform the respective officers
and directors of the Company or its subsidiaries and the employees, agents and
representatives of the Company and its subsidiaries of its obligations pursuant
to the Merger Agreement. The Company will promptly notify Purchaser if any such
inquiries or proposals are received by, any such information is requested from
or any such negotiations or discussions are sought to be initiated or continued
with the Company, will promptly inform Purchaser of all terms and conditions
thereof and will promptly furnish Purchaser with copies of any such written
inquiries or proposals. The Company also will promptly request each person which
has prior to the execution of the Merger Agreement executed a
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confidentiality agreement in connection with its consideration of acquiring the
Company to return all confidential information heretofore furnished to such
person by or on behalf of the Company. The foregoing does not prohibit the
Company or its Board of Directors from taking and disclosing to the Company's
shareholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from making such
disclosure to the Company's shareholders which, as advised by outside counsel to
the Company, is required under applicable law.
Indemnification and Insurance. Pursuant to the Merger Agreement, Purchaser
has agreed that, from and after the Effective Time, it will indemnify and hold
harmless each present and former director or officer of the Company (in each
case solely in such person's capacity as a director or officer of the Company,
as the case may be), determined as of the Effective Time (the "Indemnified
Parties"), against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent that the Company would
have been permitted under applicable law and required under its By-Laws or
pursuant to other agreements, each as in effect on the date of the Merger
Agreement, to indemnify such person (and Purchaser shall also advance expenses
as incurred to the fullest extent permitted under applicable law and required
under its By-Laws, provided that the person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification); provided that any
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under Maine law, the
Company's Articles of Incorporation and By-Laws shall be made by independent
counsel selected by the Surviving Corporation.
Purchaser has agreed to maintain or cause the Surviving Corporation to
maintain the Company's existing officers' and directors' liability insurance
policies or replacement policies covering the same persons and containing terms
which are, in the aggregate, no less advantageous to such persons than such
existing policies ("D&O Insurance") for a period of six years after the
Effective Time; provided, however, that in no event will Purchaser or the
Surviving Corporation be required to make annual premium payments to obtain such
Insurance Coverage in excess of 150% of the last annual premium paid prior to
the date of the Merger Agreement (the "Cap"). Purchaser has agreed further that
if the D&O Insurance cannot be obtained for an amount less than or equal to the
Cap during such six year period, Purchaser will use its best efforts to obtain,
or cause the Surviving Corporation to obtain, as much D&O Insurance as can be
obtained for the remainder of such period for a premium not in excess (on an
annualized basis) of the Cap.
Termination. The Merger Agreement provides that it may be terminated and
the Merger may be abandoned: (i) by the mutual consent of Purchaser and the
Company, by action of their respective Boards of Directors at any time prior to
the Effective Time, before or after the approval by holders of Shares; (ii) by
action of the Board of Directors of either Purchaser or the Company if (a)
Merger Sub, or any Purchaser Company, shall have terminated the Offer, in
accordance with the terms of the Offer as set forth in the Merger Agreement
without purchasing any Shares pursuant thereto; provided, in the case of
termination of the Merger Agreement by Purchaser, such termination of the Offer
is not in violation of the terms of the Offer, (b) the Merger shall not have
been consummated by November 30, 1995 whether or not such date is before or
after the approval by holders of Shares (provided such right of termination
shall not be available to any party whose failure to fulfill any obligation
under the Merger Agreement has been the cause or resulted in the failure of the
Merger not to have been consummated by such date), (c) any court of competent
jurisdiction has issued an injunction permanently restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger, which
injunction has become final and nonappealable or (d) the approval of
shareholders required by the Merger Agreement shall not have been obtained at a
meeting duly convened therefor; (iii) by action of the Board of Directors of
Purchaser, at any time prior to the purchase of Shares pursuant to the Offer, if
(a) the Board of Directors of the Company shall have withdrawn or modified in a
manner adverse to Purchaser or Merger Sub its approval or recommendation of the
Offer, the Merger Agreement or the Merger or (b) the Board of Directors of the
Company, upon request by Purchaser, shall fail to reaffirm such approval or
recommendation, or shall have resolved to do any of the foregoing referred to in
clause (a) or (b) of this
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clause (iii); (iv) by action of the Board of Directors of the Company, at any
time prior to the purchase of Shares pursuant to the Offer, if (a) Purchaser or
Merger Sub (or another Purchaser Company) shall have failed to commence the
Offer within the time required by the Merger Agreement, (b) any of the
representations and warranties of Purchaser or Merger Sub contained in the
Merger Agreement or the Stock Purchase Agreement were untrue or incorrect in any
material respect when made or have since become, and at the time of termination
remain, untrue or incorrect in any material respect, (c) Purchaser or Merger Sub
shall have breached or failed to perform in any material respect any of its
obligations, covenants or agreements under the Merger Agreement or the Stock
Purchase Agreement or any representation or warranty of Purchaser or Merger Sub
set forth in the Merger Agreement or the Stock Purchase Agreement shall have
been untrue or incorrect when made or thereafter shall become untrue or
incorrect, except where such breach, failure to perform or lack of truthfulness
or correctness has been caused by or results from a breach by the Company of any
of its obligations under the Merger Agreement or the Stock Purchase Agreement or
(d) the Company receives an offer with respect to an Acquisition Proposal and
the Board of Directors of the Company, in the exercise of its fiduciary duties
as advised by outside counsel to the Company, determines to recommend such
Acquisition Proposal to the Company's shareholders; provided that the Company
(x) shall notify Purchaser and Merger Sub promptly of receipt of such
Acquisition Proposal and (y) shall notify Purchaser and Merger Sub promptly of
its intention to recommend such Acquisition Proposal to the Company's
shareholders, but in no event shall the notice referred to in clause (y) be
given less than 24 hours prior to the earlier of the public announcement of such
recommendation or the Company's termination of the Merger Agreement.
Termination Fee. The Merger Agreement provides that if (i) the Offer shall
have remained open for the period required pursuant to the terms of the Merger
Agreement, (ii) the Minimum Condition shall not have been satisfied and the
Offer is terminated without the purchase of any Shares thereunder, (iii) the
Company receives an Acquisition Proposal (other than from one of the Purchaser
Companies) after the date of the Merger Agreement and prior to the termination
thereof and (iv) after the date of the Merger Agreement, but within one year of
the date of the Merger Agreement, any corporation, partnership, person, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act) other than
Purchaser or Merger Sub or any of their respective subsidiaries or affiliates
shall have become the beneficial owner of more than 50% of the outstanding
shares of each of the Class A Common Stock and the Class B Common Stock, then
the Company, if requested by Purchaser, shall promptly, but in no event later
than two days after the date of such request, pay Purchaser a fee of 2.5% of the
total dollar value of the Offer, calculated as the product of (x) the number of
Shares outstanding as of the date of the Merger Agreement and (y) the Merger
Consideration, which amount shall be payable in immediately available funds.
Such fee will not be payable by the Company if the Merger Agreement is
terminated by the Company due to a breach by Purchaser or Merger Sub of its
obligations under the Merger Agreement or the Stock Purchase Agreement. The
Company has agreed that if the Company fails to pay promptly the amount due
pursuant to the termination fee provisions, and, in order to obtain such
payment, Purchaser or Merger Sub commences a suit which results in a judgment
against the Company for the fee pursuant to the termination fee provisions, the
Company shall pay to Purchaser or Merger Sub its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on the
amount of the fee.
Amendment and Waiver. Subject to the applicable provisions of the MBCA, at
any time prior to the Effective Time, Purchaser, Merger Sub and the Company may
modify or amend the Merger Agreement, by written agreement executed and
delivered by duly authorized officers of the respective parties. The conditions
to the obligations of Purchaser, Merger Sub and the Company may be waived by
each such party in whole or in part to the extent permitted by applicable law.
Expenses. Whether or not the Merger is consummated, all expenses incident
to preparing for, entering into and carrying out the Merger Agreement, the
consummation of the Merger and the transactions contemplated by the Stock
Purchase Agreement shall be paid by the party incurring such expenses.
(ii) STOCK PURCHASE AGREEMENT. Concurrently with the execution of the
Merger Agreement, Purchaser, Merger Sub and the Company entered into the Stock
Purchase Agreement. The following summary of the Stock Purchase Agreement does
not purport to be complete and is qualified in its entirety by reference to
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the text of the Stock Purchase Agreement, a copy of which is filed as Exhibit
(2) hereto and is incorporated herein by reference.
The Stock Purchase. Subject to the terms and conditions of the Stock
Purchase Agreement, the Company will sell to Merger Sub and Merger Sub will
purchase from the Company (the "Stock Purchase"), at a price per share equal to
the Merger Consideration, all shares of Class B Common Stock which are
authorized but unissued or held in treasury (an aggregate of 757,943 shares) and
which remain available for purchase following the exercise by the holders of
Class B Common Stock of preemptive rights in connection therewith (the
"Available Shares"). The Stock Purchase is expected to be consummated on the
date on which all of the conditions thereto are fulfilled or waived.
The Rights Offering. The Articles of Incorporation of the Company provide
that the holders of Class B Common Stock have preemptive rights in connection
with the issuance of additional shares of Class B Common Stock, including the
Stock Purchase. Therefore, on February 28, 1995 the Company filed with the SEC a
Registration Statement on Form S-3 (the "Registration Statement") with respect
to an offering to its Class B shareholders of up to 757,943 shares of Class B
Common Stock pursuant to such holders' preemptive rights (the "Rights
Offering"). Pursuant to the Rights Offering, holders of record of the Class B
Common Stock on March 3, 1995 (the "Record Date") will receive nontransferable
rights (the "Rights") to purchase up to an aggregate of 757,943 shares of Class
B Common Stock at a cash purchase price of $40.00 per share. Each holder will
receive .435 Rights for each share of Class B Common Stock held on the Record
Date. Each Right entitles the holder to purchase one share of Class B Common
Stock. The number of Rights to be issued for each share of Class B Common Stock
was determined by dividing the number of shares of Class B Common Stock offered
(757,943 shares) by the number of shares of Class B Common Stock that will be
outstanding on the Record Date (1,742,057 shares).
The Company has agreed in the Stock Purchase Agreement to mail, not later
than March 10, 1995 (the "Notice Date"), notice of the Company's intent to
conduct the Rights Offering. The Company has further agreed to mail, not later
than five business days after the Registration Statement is declared effective
by the Commission (the "Exercise Date"), a subscription right certificate
specifying the number of Shares for which the Rights issued to each Record Date
holder are exercisable along with a copy of the prospectus and other offering
materials related to the Rights Offering. The Rights Offering materials mailed
to Record Date holders will provide that the period during which Record Date
holders may exercise Rights shall expire on the later of (x) 30 days after the
Notice Date and (y) 5 days after the Exercise Date (the "Termination Date").
Prior to 10:00 p.m., New York time, on the Termination Date, the Company is
required to notify Purchaser in writing of the number of Available Shares
remaining for purchase by Purchaser. Following the Termination Date, the Rights
will no longer be exercisable and will have no value.
Conditions to the Stock Purchase. The obligations of each of the parties
to consummate the Stock Purchase is conditioned upon the following: (i) the
Offer shall have been successfully completed; (ii) the Registration Statement
shall have been declared effective by the SEC and no stop order shall have been
issued, and no proceeding for such purpose shall have been initiated or
threatened, with respect thereto; (iii) the waiting period provisions of the HSR
Act applicable to the Stock Purchase shall have expired or been terminated and
all required approvals of the SEC to permit the Offer and the Rights Offering to
be conducted simultaneously shall have been obtained; (iv) the Rights Offering
shall have been completed in conformity with the Registration Statement, the
Company's Articles of Incorporation and By-Laws and the MBCA; and (v) the
correctness of the representations and warranties, and the performance of all
obligations, of Purchaser and Merger Sub, on the one hand, and the Company, on
the other hand, under the Merger Agreement and the Stock Purchase Agreement. The
obligations of Purchaser and Merger Sub under the Stock Purchase Agreement are
further conditioned upon the approval for listing on the American Stock Exchange
of the shares of Class B Common Stock offered in the Rights Offering.
Representations and Warranties. The Company makes certain representations
and warranties in the Stock Purchase Agreement relating to, among other things,
its authority to enter into the Stock Purchase Agreement, the issuance of the
offered shares and the Rights, the Registration Statement and certain other
documents relating to the Rights Offering. Purchaser and Merger Sub make
representations and warranties
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relating to, among other things, their authority to enter into the Stock
Purchase Agreement and the sufficiency of funds available to consummate the
Stock Purchase.
Indemnification. The Company, Purchaser and Merger Sub have agreed to
indemnify each other against certain liabilities and expenses relating to the
Registration Statement, including liabilities under the Securities Act of 1933,
as amended.
Termination. The Stock Purchase Agreement shall terminate (i) by mutual
consent of the Company, Purchaser and Merger Sub or (ii) upon the termination of
the Merger Agreement.
(iii) CONFIDENTIALITY AGREEMENT. On January 30, 1995, the Company and
Purchaser entered into a confidentiality agreement (the "Confidentiality
Agreement") pursuant to which the Company agreed to supply certain information
to Purchaser and its affiliates, and Purchaser agreed to treat, and to cause its
affiliates, representatives and advisors to treat, such information as
confidential. Purchaser also agreed to indemnify the Company and its affiliates
and representatives from liabilities arising out of a breach or alleged breach
of the Confidentiality Agreement.
The foregoing summary of the Confidentiality Agreement does not purport to
be complete and is qualified in its entirety by reference to the text of the
Confidentiality Agreement, a copy of which is filed as Exhibit (3) hereto and is
incorporated herein by reference.
Certain conflicts of interest between the Company and its directors,
executive officers and affiliates are described below:
CERTAIN LITIGATION. On February 22, 1995, William Ziegler, III, Chairman
of the Board of the Company, on behalf of himself and, purportedly, GIH Corp.,
filed suit in Superior Court, Cumberland County, Maine seeking declaratory and
injunctive relief against the Merger Agreement, the Stock Purchase Agreement and
the transactions contemplated thereby. The complaint, entitled GIH Corp. and
William Ziegler, III v. American-Maize Products Co. et. al., alleges that the
approval by the remaining members of the Company's Board of Directors of the
Merger Agreement and Stock Purchase Agreement and their authorization of
"break-up" fee provisions in the Merger Agreement constituted a breach of their
fiduciary duties. The complaint asserts that the proposed issuance of additional
shares of Class B Common Stock by the Company pursuant to the Stock Purchase
Agreement is ultra vires and requests the court to declare such issuance
unlawful and void. The complaint also alleges that the defendant directors'
approval of certain termination agreements with senior officers of the Company
violated the directors' fiduciary duties. The Company believes all of the claims
contained in the complaint are without merit and intends to defend against them
vigorously.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation; Background
On August 26, 1994, the Company retained CS First Boston Corporation ("CS
First Boston") to act as its financial advisor with respect to the Company's
review of its strategic and financial alternatives. The Company's Board of
Directors reviewed such alternatives at a meeting of the Board held on September
28, 1994. At such meeting, the Company's management reviewed the Company's
operating history and the opportunities for future growth. CS First Boston
presented the Board with a preliminary review of strategic alternatives,
including, among others, the separation of the Company's corn and tobacco
businesses. Following discussion, the Board directed CS First Boston to continue
with its review of alternatives.
At a meeting of the Company's Board of Directors held on October 26, 1994,
the Board continued its consideration of strategic alternatives with its
financial and legal advisors. CS First Boston reviewed with the Board its
preliminary assessment of the Company's strategic alternatives, including
continuing to operate the Company in its present form and selling either the
corn or tobacco businesses. CS First Boston provided various preliminary
recommendations to the Company with respect to its strategic alternatives, one
of which was to examine the sale of the tobacco business and use the proceeds of
such sale to accelerate the growth of the corn business. The Board then
discussed the financial condition and future outlook of the Company's businesses
and the potential timing and structure of a sale of the tobacco business. At
such meeting, William
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Ziegler, III, Chairman of the Board of the Company, stated that he opposed the
sale of the Company's tobacco business, and advised the Board that if it
proceeded with any such sale, he would direct his counsel to "take the necessary
steps to prevent that from happening." The Board directed CS First Boston and
management to prepare additional presentations regarding the sale of the tobacco
business for the Board's consideration. The Board also requested that Mr.
Ziegler describe in more detail his reasons for opposing any such sale in light
of Mr. Ziegler's previous expressions of interest in spinning off the tobacco
business to the Company's shareholders.
The Company's Board of Directors continued its consideration of the sale of
the Company's tobacco business at a Board meeting held on November 30, 1994.
During such meeting, Mr. Ziegler stated his views with respect to the control of
GIH Corp. and the Company. GIH Corp. owns approximately 13.4% of the Company's
Class A Common Stock and approximately 47.3% of the Company's Class B Common
Stock. All the shares of GIH Corp. are held directly by, or in various trusts
for the benefit of, Mr. Ziegler and his sister, Helen Z. Steinkraus. Control of
GIH Corp. is the subject of litigation initiated in New York Surrogate's Court
by the children of Mrs. Steinkraus challenging the prior distribution of the
controlling share of GIH Corp. common stock to a trust for the benefit of Mr.
Ziegler (the "One Share Litigation"). On April 4, 1994, the New York Surrogate's
Court issued a decision in favor of Mr. Ziegler, and Mrs. Steinkraus' children
have filed an appeal of such decision, which appeal was argued on February 15,
1995. Pursuant to certain settlement and stockholder agreements (the "Settlement
Agreements") entered into in March 1991, Mr. Ziegler, Mrs. Steinkraus and GIH
Corp. agreed that, until the final resolution of the One Share Litigation, their
shares of the Company's common stock would be voted for directors nominated by
the Company in accordance with certain agreed upon "succession resolutions"
adopted by the Company's Board of Directors in March 1991. These resolutions
provide for Board seats for Mr. Ziegler and Mrs. Steinkraus or their designees
and require that the majority of the Board consist of directors who are neither
employees of the Company nor members of the Ziegler or Steinkraus families.
At the November 30th Board meeting, Mr. Ziegler informed the Board that he
believed that the Settlement Agreements were no longer in effect as a result of
the Surrogate's Court decision. Mr. Ziegler stated his belief that he,
therefore, controlled GIH Corp. and the Company. Mr. Ziegler then indicated that
he is "unalterably opposed" to the sale of the tobacco business. Mr. Ziegler
stated that he would "fight this sale with all proper and legal means at [his]
disposal because of [his] very strong conviction that it will fundamentally
change the value of the Company." Mr. Ziegler further stated that "the Company
is not for sale."
CS First Boston then presented the Board with a review of certain financial
considerations relating to a sale of the tobacco business. Management of the
Company presented the Board with an analysis of the operating history and
prospects of the tobacco business. Following discussion and consideration, the
Board unanimously determined to terminate consideration of the sale of the
tobacco business at that time as not being in the best interests of the
Company's shareholders.
Subsequent to the Board meeting, the Company filed a Current Report on Form
8-K with the Commission, reporting Mr. Ziegler's position that the Settlement
Agreements were no longer in effect as a result of the Surrogate's Court
decision in the One Share Litigation, and stating that the Company disagreed
with Mr. Ziegler's position. The Company stated its position that such
agreements remained in effect, according to their terms, until final resolution
of the One Share Litigation, and that final resolution would not occur until the
appeals process with respect to such litigation was exhausted.
In early December 1994, representatives of Purchaser met with Mr. Ziegler
and other members of his family to express an interest in acquiring the Company
and seek the cooperation of Mr. Ziegler. Mr. Ziegler indicated that he was not
willing to sell his shares, and subsequently informed the Company's Board of
Directors of such meeting. On December 16, 1994, Patric J. McLaughlin, President
and Chief Executive Officer of the Company met with representatives of Purchaser
to discuss a potential transaction.
On December 19, 1994, Purchaser forwarded a letter to the Company proposing
to acquire the Company at a price of $32.00 per share. The Board considered
Purchaser's proposal at a meeting held on January 6, 1995. At such meeting, CS
First Boston reviewed with the Board certain financial considerations relating
to
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the proposal by Purchaser, and discussed the Company's strategic options.
Following discussion and consideration, the Board of Directors unanimously
determined that the $32.00 proposal by Purchaser was inadequate, and the Company
issued a press release to that effect on January 6, 1995. Such press release
also included Mr. Ziegler's statement that his shares were "not for sale or
tender." On January 9, 1995, Mr. Ziegler issued a press release stating that he
was the controlling stockholder of the Company and reiterating that the Ziegler
family shares were "not for sale or tender." The Company subsequently received
the written opinion of CS First Boston, dated as of January 6, 1995, that
Purchaser's proposal was inadequate to the Company's shareholders from a
financial point of view.
In mid-January 1995, alleged shareholders of the Company filed complaints
in Connecticut Superior Court in three purported class actions against the
Company and its Board of Directors, entitled Kenneth Steiner and William Steiner
v. American Maize-Products Co., et al., Alan Katz v. American Maize-Products
Co., et al. and Mitchell Saltzman and Miriam Sarnoff v. American Maize-Products
Co., et al. The actions allege that the Company's Board of Directors breached
its fiduciary duties to shareholders by not adequately considering Purchaser's
initial offer on December 19, 1994 to acquire the Company at a purchase price of
$32.00 per share, by rejecting such offer, by failing to make adequate
disclosure of the Offer and by placing personal interests, including an alleged
attempt by Mr. Ziegler to retain control of the Company, ahead of the interests
of the public shareholders. The complaints seek equitable relief and unspecified
damages. These claims are described in Item 8 below.
Over the next several days, management of the Company and its legal
advisors had conversations with Purchaser and its financial and legal advisors
regarding the possibility of Purchaser submitting a revised proposal. On January
20, 1995, Purchaser submitted a revised proposal to acquire the Company at a
price of $37.00 per share. The Company issued a press release on such date
announcing receipt of the revised offer from Purchaser and stating that CS First
Boston was acting as financial advisor to assist the Company in considering such
proposal. On January 23, 1995, Mr. Ziegler issued a press release reiterating
that the Shares which he owns or controls were "not for sale or tender."
At a meeting held on January 25, 1995 (with one director absent), the
Company's Board of Directors discussed Purchaser's revised proposal with its
legal and financial advisors, and unanimously authorized the Company's officers
to explore the revised proposal and any other potential transaction to maximize
stockholder value. In addition, employment agreements with seven Company
executives and an amendment to the employment agreement of Patric J. McLaughlin,
President and Chief Executive Officer of the Company, were approved by the Board
at such meeting (with two directors voting against the employment agreements and
one director voting against the amendment). Such employment agreements and
amendment had been approved by the Compensation Committee of the Company on
November 30, 1994. The employment agreements and amendment are filed as Exhibits
(4) through (11) hereto.
On January 30, 1995, the Company and Purchaser entered into the
Confidentiality Agreement, and Purchaser commenced a due diligence review of the
Company's businesses and operations. Shortly thereafter, Purchaser and its legal
advisors circulated drafts of the Merger Agreement and Stock Purchase Agreement.
During the next several weeks, the Company and Purchaser and their legal and
financial advisors met on several occasions to negotiate the terms of such
agreements and to discuss the proposed price and structure of a transaction.
Purchaser's due diligence review of the Company's operations also continued
during this time.
In addition, during such period, other parties expressed an interest in
exploring a potential acquisition of the Company or its corn or tobacco
businesses. The Company executed confidentiality agreements with eight such
parties, and provided certain non-public information regarding the Company to
such parties. In addition, CS First Boston held preliminary discussions with
such parties. Two such parties undertook extensive due diligence reviews of the
Company's businesses and operations.
In early February, the Company's legal and financial advisors attempted to
discuss Purchaser's proposal and other alternatives to maximize shareholder
value with Mr. Ziegler and his legal counsel. Mr. Ziegler's legal counsel
responded that Mr. Ziegler would not discuss these matters other than in a
meeting of the Company's Board of Directors.
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On February 20, 1995, Purchaser forwarded a letter to Mr. Ziegler, Mrs.
Steinkraus and the trustees for the Ziegler and Steinkraus trusts, stating that,
in connection with its proposal to acquire the Company, Purchaser would be
willing to discuss with such parties the acquisition of all GIH Corp. stock in
order to acquire the shares of Company stock held by GIH Corp. if such purchase
would be helpful in minimizing adverse tax consequences to such parties.
On February 21, 1995, CPC International Inc., a party that had signed a
confidentiality agreement, forwarded to the Company a preliminary, non-binding
proposal (the "CPC Proposal") to acquire the assets and certain liabilities of
the Company's corn business for approximately $500 million, subject to
adjustment for certain changes in net assets, financial assets and liabilities
and certain other liabilities and the conduct of additional due diligence. Such
proposed transaction would have been subject to a significant corporate-level
tax. Such transaction was conditioned upon, among other things, receipt of
irrevocable proxies of GIH Corp. and Mr. Ziegler to vote their shares in favor
of such transaction. The Company issued a press release announcing the CPC
Proposal on the morning of February 22, 1995. In addition, on February 21, 1995,
the Company received an indication of interest in a potential acquisition of the
Company from another third party with whom the Company had previously entered
into a confidentiality agreement. Such third party indicated that it would
require several weeks to conduct additional due diligence before being able to
make a proposal to the Company with respect to a potential transaction although
it was confident such proposal would likely be at a value in excess of the
$37.00 offer made by Purchaser.
At a meeting held on February 22, 1995, the Company's Board of Directors
considered Purchaser's proposal, the CPC Proposal, the other third party
indication of interest and the Company's other strategic alternatives. During
such meeting, CS First Boston and Lazard continued to negotiate price terms, and
the Company received a revised proposal from Purchaser during the meeting to
acquire the Company for $40 per share, which offer by its terms would expire at
midnight that same day. The Board reviewed with its legal advisor the terms of
the proposed Merger Agreement and Stock Purchase Agreement and its legal
obligations with respect to Purchaser's proposal and the other available
alternatives. CS First Boston reviewed with the Board certain financial
considerations relating to the CPC Proposal and Purchaser's offer. CS First
Boston also reviewed the status of the Company's discussions with other parties
that had expressed preliminary interest in exploring a potential transaction. CS
First Boston then delivered its oral opinion (subsequently confirmed in writing)
that the consideration to be received by the Company's stockholders pursuant to
the Offer and the Merger is fair to such stockholders from a financial point of
view. A copy of CS First Boston's written opinion is attached hereto and is
filed herewith as Exhibit (13).
During the meeting, Mr. Ziegler stated that the shares of Company common
stock owned or controlled by the Ziegler family were not for sale. Mr. Ziegler
then stated that he believed the transactions contemplated by the Stock Purchase
Agreement were illegal, and that Board authorization of such transactions would
constitute a breach of fiduciary duty. Mr. Ziegler further stated that he would
hold each director personally responsible for all the Company's costs in
connection with the Offer and the Merger, including severance payments and
"break-up" fees. Mr. Ziegler's legal counsel then stated that Mr. Ziegler and,
purportedly, GIH Corp. had, that day, commenced litigation in Maine Superior
Court against the Company and its directors seeking declaratory and injunctive
relief, and unspecified damages, in connection with the Merger Agreement and the
Stock Purchase Agreement, as well as certain alleged termination agreements with
senior officers of the Company. Copies of the complaint commencing such
litigation were then delivered to each director. Such litigation is described in
Item 3(b) above.
Following Mr. Ziegler's statement, counsel for Mrs. Steinkraus stated that
Mrs. Steinkraus was in favor of the Offer and the Merger and that GIH Corp.,
which pursuant to the Settlement Agreements was controlled equally by the
Ziegler and Steinkraus families, was not authorized to commence litigation
against the Company or its directors in this matter.
Thereafter, following extensive discussion and consideration, the Company's
Board of Directors (with Mr. Ziegler voting against, Leslie C. Liabo abstaining
and James E. Harwood and H. Barclay Morley absent) determined (i) that the
transactions contemplated by the Merger Agreement and the Stock Purchase
Agreement are fair to, and in the best interests of, the Company's stockholders,
(ii) to approve the Merger
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Agreement and the Stock Purchase Agreement and (iii) to recommend that the
Company's stockholders tender their shares pursuant to the Offer and approve the
Merger Agreement. On February 22, 1995, the Merger Agreement and the Stock
Purchase Agreement were executed.
(b) Reasons for Recommendation; Opinion of Financial Advisor.
In reaching its conclusions set forth in paragraph (a) above, the Board of
Directors considered a number of factors, including, without limitation, the
following:
(i) the opinion of CS First Boston, described below, to the effect
that the consideration to be received by the Company's shareholders in the
Offer and the Merger is fair, from a financial point of view, to the
shareholders;
(ii) presentations by management and CS First Boston to the Board of
Directors regarding the financial condition, results of operations,
business and prospects of the Company;
(iii) the uncertainties surrounding the continued management and
corporate governance of the Company as a result of the One Share Litigation
and the potential disruption in management continuity which might result if
Mr. Ziegler ultimately won the One Share Litigation;
(iv) the performance of the Company during Mr. Ziegler's tenure as
Chief Executive Officer compared to the more favorable performance of the
Company after the implementation of the Settlement Agreements and the
potential adverse financial consequences to shareholders if Mr. Ziegler
attempted to re-assert control of the Company;
(v) the position of legal counsel to the Company that the Settlement
Agreements are still in effect and Mr. Ziegler does not control the
Company, and the support of the Steinkraus family for a sale of the Company
to Purchaser;
(vi) the terms and conditions of the Merger Agreement and the Stock
Purchase Agreement, including the views of legal counsel to the Company
that, despite the assertions of Mr. Ziegler and his lawsuit, it was
appropriate to enter into such agreements if the Board, in the exercise of
its business judgment, determined to do so in the best interests of the
shareholders of the Company;
(vii) the opportunity that existed during the period following the
Company's January 6, 1995 press release to receive indications of interest
from other parties for the Company, the number of parties that executed
confidentiality agreements and the discussions with such parties conducted
by CS First Boston and the fact that, other than the CPC Proposal, no
proposals for a transaction resulted from such process;
(viii) the terms and conditions of the CPC Proposal, including the
potential continuing liabilities to the Company and price adjustments
associated therewith, certain due diligence requirements, the condition of
obtaining the proxies of Mr. Ziegler and GIH Corp., tax consequences and
the preliminary nature of such proposal;
(ix) a review of the other possible alternatives to the Offer and the
Merger, including, among others, the possibility of continuing to operate
the Company as an independent entity and the sale of the Company's corn
and/or tobacco businesses to alternative buyers;
(x) the trading prices of the Shares, including likely trading prices
if a transaction for the sale of all or part of the Company was not
consummated, and that the $40.00 price to the shareholders in the Offer and
the Merger represented a premium of approximately 49.5% over the closing
sales price for the Class A Common Stock and 52.4% over the closing sales
price for the Class B Common Stock on the American Stock Exchange ("AMEX")
on January 5, 1995, the last trading day prior to the first public
announcement that the Company had received an expression of interest
regarding a potential sale of the Company;
(xi) the provisions of the Merger Agreement that enable the Company to
(a) provide information to, and hold discussions with, unsolicited bidders
for the Company if required in the exercise of the directors' fiduciary
duties and (b) terminate the Merger Agreement prior to the consummation of
the
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Offer if the Company receives an offer with respect to an Acquisition
Proposal that the Board of Directors, in the exercise of its fiduciary
duties, determines to recommend to the Company's shareholders, provided
that the Company gives Purchaser 24-hour notice prior to such termination;
(xii) the terms of the Stock Purchase Agreement which provide that,
following the completion of the Rights Offering and the satisfaction of the
other conditions to the Stock Purchase Agreement, Purchaser will purchase
the Available Shares, and that such purchase may allow the Offer to be
consummated without the Class B shares held by GIH Corp. having been
tendered;
(xiii) the fact that the Stock Purchase Agreement terminates upon
termination of the Merger Agreement, such that if the Company terminates
the Merger Agreement in order to recommend an Alternative Proposal to its
shareholders, the Stock Purchase Agreement will not impede the consummation
of such Alternative Proposal; and
(xiv) the termination fee provisions of the Merger Agreement that
require the Company to pay to Purchaser a fee of 2.5% of the total amount
to have been paid by Purchaser for the Shares if the Merger Agreement is
terminated under certain circumstances.
In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board of Directors found it
impracticable to, and did not, quantify or otherwise attempt to assign relative
weight to the specific factors considered in reaching its determination.
Opinion of Financial Advisor.
As described above, at the meeting of the Board of Directors held on
February 22, 1995, CS First Boston delivered its oral opinion (subsequently
confirmed in writing) to the effect that based upon the assumptions made,
matters considered and limits of the review undertaken, as set forth in such
opinion, the consideration to be received by the shareholders of the Company in
the Offer and the Merger is fair to such holders from a financial point of view.
The full text of CS First Boston's written opinion, dated February 22,
1995, is attached hereto and filed as Exhibit (13) to this Schedule 14D-9.
Shareholders are urged to read the opinion in its entirety for the assumptions
made, matters considered and limits of the review undertaken by CS First Boston.
CS First Boston's opinion is directed only to the fairness of the consideration
to be received by the shareholders of the Company in the Offer and the Merger,
and does not constitute a recommendation to any shareholder of the Company as to
whether such shareholder should tender Shares in the Offer or how such
shareholder should vote on the Merger. The summary of the opinion of CS First
Boston set forth in this Schedule 14D-9 is qualified in its entirety by
reference to the full text of such opinion.
In arriving at its opinion, CS First Boston reviewed the Merger Agreement
and certain publicly available business and financial information relating to
the Company. CS First Boston's opinion does not address the Company's underlying
business decision to enter into the Merger Agreement. CS First Boston also
reviewed certain other information, including financial forecasts, furnished to
CS First Boston by the Company and met with the Company's management to discuss
the business and prospects of the Company. In addition, CS First Boston also
considered certain financial and stock market data of the Company, and compared
that data with similar data for other publicly held companies in businesses
similar to those of the Company and considered the financial terms of certain
other business combinations and other transactions which have recently been
effected. CS First Boston also considered such other information, financial
studies, analyses and investigations and financial, economic and market criteria
which it deemed relevant. With respect to outstanding patent and environmental
litigation involving the Company for which significant damages are alleged, CS
First Boston relied solely upon the judgment of the management of the Company
and its counsel in such matters that the outcome of the litigation will not have
a material adverse affect on the financial condition of the Company.
In connection with its review, CS First Boston did not assume any
responsibility for independent verification of any of the foregoing information
and relied on its being complete and accurate in all material respects. With
respect to the financial forecasts, CS First Boston assumed that they were
reasonably prepared
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on bases reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of the Company. In
addition, CS First Boston did not make an independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of the Company, nor was it
furnished with any such evaluations or appraisals. CS First Boston's opinion was
necessarily based upon financial, economic, market or other conditions as they
existed and could be evaluated on the date of the opinion. In connection with
its engagement, CS First Boston approached third parties to solicit indications
of interest in a possible acquisition of the Company and was approached by third
parties indicating such interest and held preliminary discussions with certain
of those parties.
In arriving at its opinion and making its presentation to the Board of
Directors, CS First Boston performed a variety of financial analyses, including
those summarized below. The summary set forth below includes certain of the
financial analyses discussed by CS First Boston with the Board of Directors, but
does not purport to be a complete description of the analyses performed by CS
First Boston in arriving at its opinion. Arriving at a fairness opinion is a
complex process that involves various determinations as to the most appropriate
and relevant methods of financial analysis and the application of those methods
to the particular circumstances and, therefore, such an opinion is not
necessarily susceptible to partial analysis or summary description. CS First
Boston believes that its analyses must be considered as a whole and that
selecting portions of its analyses or portions of the factors considered by it,
without considering all analyses and factors, could create an incomplete view of
the evaluation process underlying its opinion. In performing its analyses, CS
First Boston made numerous assumptions with respect to industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of the Company. Any estimates incorporated
in the analyses performed by CS First Boston are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by such analyses. Additionally, estimates of the value
of businesses and securities neither purport to be appraisals nor necessarily
reflect the prices at which businesses or securities may actually be sold.
Accordingly, such analyses and estimates are inherently subject to substantial
uncertainty. No public company utilized as a comparison is identical to the
Company, and none of the similar transactions utilized as a comparison is
identical to the Offer and the Merger. Accordingly, an analysis of publicly
traded comparable companies and comparable acquisition transactions is not
mathematical; rather it involves complex considerations and judgments concerning
differences in financial and operating characteristics of the comparable
companies or the companies involved in comparable acquisition transactions and
other factors that could affect the public trading value of the comparable
companies or company or transaction to which they are being compared.
In the past, CS First Boston has performed certain investment banking
services for the Company and for Purchaser, and has received customary fees for
such services.
The following is a summary of the analyses performed by CS First Boston in
connection with its fairness opinion. CS First Boston's analyses are based on a
valuation of the Company's three business divisions: Fructose, Food Ingredients
and Tobacco.
FRUCTOSE
Discounted Cash Flow Analysis. CS First Boston calculated the estimated
unlevered after-tax cash flows that the Company's fructose business based in
Decatur, Alabama and Dimmitt, Texas ("Fructose") could be expected to generate
over the ten-year period ending December 31, 2004, using management's
projections of Fructose's future financial performance for 1995-1999 and
projections developed by CS First Boston, after discussions with management, for
January 1, 2000 through December 31, 2004. Using these projections, CS First
Boston then calculated estimated terminal values for Fructose at the end of the
ten-year period by applying multiples ranging from 5.5x to 6.5x (based on the
way businesses such as Fructose are valued in the public and private markets) to
such projections' projected 2004 operating cash flow (defined as operating
income plus depreciation and amortization ("EBITDA")). The unlevered cash flows
for the projected ten-year period and the range of terminal values were then
discounted to December 31, 1994 using annual discount rates ranging from 11% to
12% (chosen to reflect the weighted average cost of capital of businesses such
as Fructose) to imply a hypothetical enterprise value for Fructose. Two cases
were calculated: a base case, and an expansion case in which fructose production
at the Decatur, Alabama plant is increased.
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The discounted cash flow analysis indicated a hypothetical enterprise value for
Fructose of between $279.1 million to $316.8 million for the base case and a
hypothetical enterprise value for Fructose of between $324.7 million to $387.4
million for the expansion case.
Comparable Companies Analysis. CS First Boston reviewed certain publicly
available historical information for the period from January 1, 1993 to
September 30, 1994 and projected 1994 and projected 1995 financial results
(reflecting a composite of research analysts' estimates) of certain corn wet
milling and food ingredients companies considered by CS First Boston to be
reasonably comparable to Fructose, including Archer Daniels-Midland, ConAgra
Inc., CPC International Inc., Midwest Grain Products, Penwest Ltd. and Universal
Foods. CS First Boston then applied the comparable companies' multiples of the
latest 12-month period, projected 1994 and projected 1995 financial performance
(including sales, operating income, EBITDA, net income and earnings per share)
to imply a hypothetical enterprise value for Fructose. The comparable companies
analysis indicated a hypothetical enterprise value for Fructose of between
$250.0 million to $300.0 million.
Comparable Acquisitions Analysis. CS First Boston reviewed the acquisition
multiples of companies considered by CS First Boston to be reasonably comparable
to Fructose that were the target companies in certain recent transactions
involving partial or complete acquisitions. The comparable transactions involved
transactions for target companies in the corn wet milling and food ingredients
industries. CS First Boston calculated certain multiples (including sales,
EBITDA, operating income, net income and grind capacity) of the prices paid in
such acquisitions and applied such multiples to Fructose's latest 12-month
period ended December 31, 1994 results to imply a hypothetical enterprise value
for Fructose. The comparable acquisitions analysis indicated a hypothetical
enterprise value for Fructose of between $280.0 million to $330.0 million.
CS First Boston Reference Range. On the basis of the valuation
methodologies employed in the analyses above, CS First Boston developed an
enterprise value reference range for Fructose of between $300.0 million to
$340.0 million.
FOOD INGREDIENTS
Discounted Cash Flow Analysis. CS First Boston calculated the estimated
unlevered after-tax cash flows that the Company's food ingredients business
including its corn syrup business based in Hammond, Indiana ("Food Ingredients")
could be expected to generate over the ten-year period ending December 31, 2004,
using management's projections of Food Ingredients' future financial performance
for 1995-1999 and projections developed by CS First Boston, after discussions
with management, for projections from January 1, 2000 through December 31, 2004.
Using these projections, CS First Boston then calculated estimated terminal
values for Food Ingredients at the end of the ten-year period by applying
multiples ranging from 5.5x to 6.5x (based on the way businesses such as Food
Ingredients are valued in the public and private markets) to such projections'
projected 2004 EBITDA. The unlevered cash flows for the projected ten-year
period and the range of terminal values were then discounted to December 31,
1994 using annual discount rates ranging from 11% to 12% (chosen to reflect the
weighted average cost of capital of businesses such as Food Ingredients) to
imply a hypothetical enterprise value for Food Ingredients. The discounted cash
flow analysis indicated a hypothetical enterprise value for Food Ingredients of
between $95.0 million to $121.2 million.
Comparable Companies Analysis. CS First Boston reviewed certain publicly
available historical information for the period from January 1, 1993 to
September 30, 1994 and projected 1994 and projected 1995 financial results
(reflecting a composite of research analysts' estimates) of certain corn wet
milling and food ingredients companies considered by CS First Boston to be
reasonably comparable to Food Ingredients, including Archer Daniels-Midland,
ConAgra Inc., CPC International Inc., Midwest Grain Products, Penwest Ltd. and
Universal Foods. CS First Boston then applied the comparable companies'
multiples of the latest 12-month period, projected 1994 and projected 1995
financial performance (including sales, operating income, EBITDA, net income and
earnings per share) to imply a hypothetical enterprise value for Food
Ingredients. The comparable companies analysis indicated a hypothetical
enterprise value for Food Ingredients of between $80.0 million to $100.0
million.
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Comparable Acquisitions Analysis. CS First Boston reviewed the acquisition
multiples of companies considered by CS First Boston to be reasonably comparable
to Food Ingredients that were the target companies in certain recent
transactions involving partial or complete acquisitions. The comparable
transactions involved transactions for target companies in the corn wet milling
and food ingredients industries. CS First Boston calculated certain multiples
(including sales, EBITDA, operating income, net income and grind capacity) of
the prices paid in such acquisitions and applied such multiples to Food
Ingredient's latest 12-month period ended December 31, 1994 results to imply a
hypothetical enterprise value for Food Ingredients. The comparable acquisitions
analysis indicated a hypothetical enterprise value for Food Ingredients of
between $90.0 million to $110.0 million.
CS First Boston Reference Range. On the basis of the valuation
methodologies employed in the analyses above, CS First Boston developed an
enterprise value reference range for Food Ingredients of between $95.0 million
to $110.0 million.
TOBACCO
Discounted Cash Flow Analysis. CS First Boston calculated the estimated
unlevered after-tax cash flows that the Company's tobacco businesses ("Tobacco")
could be expected to generate over the ten-year period ending December 31, 2004,
using management's projections of Tobacco's future financial performance for
1995-1999 and projections developed by CS First Boston, after discussions with
management, for January 1, 2000 through December 31, 2004. Using these
projections, CS First Boston then calculated estimated terminal values for
Tobacco at the end of the ten-year period by applying multiples ranging from
5.0x to 5.5x (based on the way businesses such as Tobacco are valued in the
public and private markets) to such projections' projected 2004 EBITDA. The
unlevered cash flows for the projected ten-year period and the range of terminal
values were then discounted to December 31, 1994 using annual discount rates
ranging from 13% to 14% (chosen to reflect the weighted average cost of capital
businesses such as Tobacco) to imply a hypothetical enterprise value for
Tobacco. Two cases were calculated: a base case and an alternate case. The
alternate case assumes lower unit volume and pricing growth. The discounted cash
flow analysis indicated a hypothetical enterprise value for Tobacco of between
$226.4 million to $251.1 million for the base case and a hypothetical enterprise
value for Tobacco of between $173.9 to $190.1 million for the alternate case.
Comparable Companies Analysis. CS First Boston reviewed certain publicly
available historical information for the period from January 1, 1993 to
September 30, 1994 and projected 1994 and projected 1995 financial results
(reflecting a composite of research analysts' estimates) of certain tobacco
companies considered by CS First Boston to be reasonably comparable to Tobacco,
including Culbro Corp., Philip Morris Co., RJR Nabisco Holdings and UST Inc. CS
First Boston then applied the comparable companies' multiples of the latest
12-month period, projected 1994 and projected 1995 financial performance
(including sales, operating income, EBITDA, net income and earnings per share)
to imply a hypothetical enterprise value for Tobacco. The comparable companies
analysis indicated a hypothetical enterprise value for Tobacco of between $133.0
million to $178.0 million.
Comparable Acquisitions Analysis. CS First Boston reviewed the acquisition
multiples of companies considered by CS First Boston to be reasonably comparable
to Tobacco that were the target companies in certain recent transactions
involving partial or complete acquisitions. The comparable transactions involved
transactions for target companies in the tobacco industry. CS First Boston
calculated certain multiples (including sales, EBITDA, operating income and net
income) of the prices paid in such acquisitions and applied such multiples to
Tobacco's latest 12-month period ended December 31, 1994 results to imply a
hypothetical enterprise value for Tobacco. The comparable acquisitions analysis
indicated a hypothetical enterprise value for Tobacco of between $175.0 million
to $210.0 million.
LBO Analysis. CS First Boston estimated what a non-strategic financial
acquiror hypothetically might pay to acquire Tobacco. The leveraged buy-out
analysis indicated a hypothetical enterprise value for Tobacco of $165.0 to
$185.0 million.
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CS First Boston Reference Range. On the basis of the valuation
methodologies employed in the analyses above, CS First Boston developed an
enterprise value reference range for Tobacco of between $175.0 million to $200.0
million.
CONSOLIDATED VALUATION
CS First Boston Consolidated Reference Range Analysis. CS First Boston
based its consolidated reference range on the enterprise value reference ranges
computed for each of the Company's three segments (Fructose, Food Ingredients
and Tobacco) minus an unallocated overhead charge, plus cash, option proceeds,
overfunded pension and other assets, with deductions including debt, capital
leases, liabilities related to patent and environmental litigation (based on
estimates provided by the Company) and certain corporate level taxes based on
structures necessary to realize indicated values. The range of these adjustments
totaled between $202.5 million to $206.8 million. The reference range analysis
indicated a hypothetical reference range for the equity value of the Company of
between $33.49 per share to $41.25 per share.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained CS First Boston on an exclusive basis to render
financial advisory services for the Company with respect to the Company's review
of its strategic and financial options, the Offer and matters arising in
connection therewith. CS First Boston is to receive an opinion fee of $675,000
for all opinions rendered with respect to the engagement, payable at the time
the first opinion is rendered by CS First Boston (the "Opinion Fee"). Strategic
advisory fees of $300,000 paid by the Company to CS First Boston in 1994 will be
credited against the Opinion Fee. In the event of a sale, directly or indirectly
and whether in one or a series of transactions, of (i) a majority or more of the
assets of the Company or (ii) capital stock representing the right to elect a
majority of the Board of Directors of the Company, or any recapitalization,
restructuring or liquidation of the Company by the current owners, a third party
or any combination thereof, or any other form of merger or disposition which
results in the effective sale of all or a significant portion of the Company
("Sale"), CS First Boston is to receive a transaction fee equal to 0.75% of the
aggregate consideration payable at the time of the closing of a Sale (the
"Transaction Fee"). The amount of any Opinion Fee actually paid in excess of the
strategic advisory fees paid in 1994 will be credited against the Transaction
Fee. If a transaction other than a Sale is consummated or a definitive agreement
is entered into that subsequently results in a strategic transaction other than
a Sale, customary fees as mutually agreed upon by the Company and CS First
Boston will be paid by the Company (which fees shall be calculated as if such
strategic transaction were a Sale). The Company has also agreed to reimburse CS
First Boston for its reasonable out-of-pocket expenses, including the reasonable
fees and expenses of its counsel, and any other advisor retained by CS First
Boston, and to indemnify CS First Boston and certain related persons and
entities.
Neither the Company nor any person acting on its behalf intends to employ,
retain or compensate any other person to make solicitations or recommendations
to the shareholders of the Company in connection with the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, no transactions in Shares have
been effected within the past 60 days by the Company or by any executive
officer, director, affiliate or subsidiary of the Company except pursuant to the
Stock Purchase Agreement and except for purchases of Shares on behalf of, and
contributions of Shares by the Company to, the Company's 401(k) Plan, in which
the Company's executive officers participate.
(b) To the best of the Company's knowledge, except as described below, all
of the Company's executive officers, directors and affiliates currently intend
to tender their Shares pursuant to the Offer.
As described in Items 3(b) and 4(a) above, on February 22, 1995, William
Ziegler, III, Chairman of the Board of the Company, stated that the Shares owned
or controlled by the Ziegler family are not for sale or tender. Also on such
date, Mr. Ziegler filed suit in Maine Superior Court seeking declaratory and
injunctive relief against the Merger Agreement, the Stock Purchase Agreement and
the transactions contemplated
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thereby as well as unspecified damages. GIH Corp., the owner of approximately
13.4% of the Class A Common Stock and approximately 47.3% of the Class B Common
Stock, is a named plaintiff in such litigation. The control of GIH Corp. is in
dispute. As described above, Mr. Ziegler has taken the position that the
Settlement Agreements are no longer in effect as a result of the Surrogate's
Court decision in the One Share Litigation and that, therefore, he controls GIH
Corp. Mrs. Steinkraus and the Company believe that the Settlement Agreements
remain in effect until the appeals process in the One Share Litigation has been
exhausted and that, therefore, control of GIH Corp. is shared equally by the
Ziegler and Steinkraus families. Mrs. Steinkraus has indicated to the Company's
Board of Directors that she is in favor of the Offer and the Merger.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as described in Item 3(b) above, no negotiation is being
undertaken or is underway by the Company in response to the Offer that relates
to or would result in (1) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (2) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (3) a tender offer for, or other acquisition of,
securities by or of the Company; or (4) any material change in the present
capitalization or dividend policy of the Company.
On February 23, 1995, Pexco Holdings, Inc., an affiliate of Usaha Tegas
sdn. bhd. ("UTSB"), a Malaysian private investment holding company, forwarded a
letter to Mr. Ziegler, Mrs. Steinkraus, GIH Corp. and the trustees of the
Ziegler and Steinkraus trusts (the "GIH Entities"), proposing that A.M.
Acquisition Corp. ("AMAC"), a wholly-owned subsidiary of UTSB, acquire all of
the Class B Common Stock owned by the GIH Entities at a purchase price of $44.00
per share (the "GIH Class B Acquisition"). Following execution of a definitive
agreement for such purchase, AMAC would agree to propose a merger transaction to
the Company pursuant to which all outstanding shares of the Company's common
stock (other than the Class B shares that are the subject of the GIH Class B
Acquisition) would be converted into the right to receive $40.25 per share in
cash. The GIH Class B Acquisition would be conditioned upon, among other things,
the amendment of the Company's Articles of Incorporation to provide that Section
910 of the MBCA shall not be applicable to the Company. (Section 910 provides
that following the acquisition by any person of 25% of the voting power, or 25%
or any class of voting stock, of a corporation, the acquiror must offer to
purchase all shares of the corporation's voting stock for "fair value.") The
obligations of all GIH Entities to effect the GIH Class B Acquisition would be
conditioned on the concurrent purchase by AMAC or any affiliate thereof of all
shares of Class A Common Stock owned by the GIH Entities at a price of not less
than $40.25 per share. The UTSB proposal will remain open until the close of
business on March 1, 1995.
On February 24, 1995, Mr. Ziegler forwarded a copy of the UTSB proposal to
the Company's Board of Directors.
(b) Except as set forth in paragraph (a) above and in Items 3(b) and 4
above, there are no transactions, Board resolutions, agreements in principle or
signed contracts in response to the Offer which relate to or would result in one
or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) Certain Litigation. In January 1995, alleged shareholders of the
Company filed complaints in Connecticut Superior Court in three purported class
actions against the Company and its Board of Directors, entitled Kenneth Steiner
and William Steiner v. American Maize-Products Co., et al., Alan Katz v.
American Maize-Products Co., et al. and Mitchell Saltzman and Miriam Sarnoff v.
American Maize-Products Co., et al. The actions allege that the Company's Board
of Directors breached its fiduciary duties to shareholders by not adequately
considering Purchaser's initial offer on December 19, 1994 to acquire the
Company at a purchase price of $32.00 per share, by rejecting such offer, by
failing to make adequate disclosure of the Offer and by placing personal
interests, including an alleged attempt by Mr. Ziegler to retain control of the
Company, ahead of the interest of the public shareholders. The complaints seek
equitable relief and unspecified damages.
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The Company believes that the allegations in the complaint are without merit and
intends to defend the actions vigorously.
(b) The information statement attached as Annex A hereto is being furnished
in connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board of Directors of the
Company other than at a meeting of the Company's shareholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(1) -- Agreement and Plan of Merger, dated as of February 22, 1995, among
the Company, Purchaser and Merger Sub.
(2) -- Stock Purchase Agreement, dated February 22, 1995, by and between
the Company, Purchaser and Merger Sub.
(3) -- Confidentiality Agreement, dated January 30, 1995, between the
Company and Purchaser.
(4) -- Employment Agreement dated January 2, 1995 by and between the
Company and Robert M. Stephan.
(5) -- Employment Agreement dated January 2, 1995 by and between the
Company and Edward P. Norris.
(6) -- Employment Agreement dated January 2, 1995 by and between the
Company and Timothy Mann.
(7) -- Employment Agreement dated January 2, 1995 by and between the
Company and Charles A. Koons.
(8) -- Employment Agreement dated January 2, 1995 by and between the
Company and Michael J. Gorbitz.
(9) -- Employment Agreement dated January 2, 1995 by and between the
Company and Jane E. Downey.
(10)-- Employment Agreement dated January 2, 1995 by and between the
Company and Frederick M. Ash.
(11)-- Employment Agreement dated July 1, 1993 by and between the Company
and Patric J. McLaughlin, and First Amendment to Employment
Agreement dated January 2, 1995.
(12)-- Letter to shareholders of the Company dated February 28, 1995.*
(13)-- Opinion of CS First Boston Corporation dated February 22, 1995.*
(14)-- Press release issued by the Company on February 22, 1995.
- ---------------
* Included in copies mailed to shareholders.
22
24
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AMERICAN MAIZE-PRODUCTS COMPANY
By: /s/ PATRIC J. MCLAUGHLIN
------------------------------------
Patric J. McLaughlin
President and Chief Executive
Officer
Dated: February 28, 1995
25
ANNEX A
AMERICAN MAIZE-PRODUCTS COMPANY
250 HARBOR DRIVE
STAMFORD, CT 06902
------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
This Information Statement is being mailed on February 28, 1995, as part of
the American Maize-Products Company's (the "Company")
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
to the holders of record of the Company's Class A common stock, par value $0.80
per share (the "Class A Common Stock") and the Company's Class B common stock,
par value $0.80 per share (the "Class B Common Stock" and, together with the
Class A Common Stock, the "Shares"). Capitalized terms used and not otherwise
defined herein shall have the meaning set forth in the Schedule 14D-9. You are
receiving this Information Statement in connection with the possible election of
persons designated by Purchaser to seats on the Company's Board of Directors.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
The Merger Agreement provides that, upon request of Purchaser, the Company
shall, subject to compliance with applicable law and promptly following the
purchase by Merger Sub of more than 50 percent of the outstanding shares of
Class A Common Stock and more than 50 percent of the outstanding shares of Class
B Common Stock pursuant to the Offer, the Stock Purchase Agreement or otherwise,
take all actions necessary to cause persons designated by Purchaser ("Purchaser
Designees") to become directors of the Company so that the total number of such
persons equals that number of directors, rounded up to the next whole number,
which represents (i) the product of (w) the total number of directors on the
Board of Directors the shares of Class A Common Stock are entitled to elect
multiplied by (x) the percentage that the number of shares of Class A Common
Stock so accepted for payment plus any shares of Class A Common Stock
beneficially owned by Purchaser or its affiliates on the date of the Merger
Agreement bears to the number of shares of Class A Common Stock outstanding at
the time of such acceptance for payment plus (ii) the product of (y) the total
number of directors on the Board of Directors the shares of Class B Common Stock
are entitled to elect multiplied by (z) the percentage that the number of shares
of Class B Common Stock so accepted for payment plus any shares of Class B
Common Stock beneficially owned by Purchaser or its affiliates on the date of
the Merger Agreement bears to the number of shares of Class B Common Stock
outstanding at the time of such acceptance for payment. In furtherance thereof,
the Company shall increase the size of the Company's Board of Directors, or use
its best efforts to secure the resignation of directors, or both, as is
necessary to permit Purchaser Designees to be elected to the Company's Board of
Directors; provided, however, that prior to the Effective Time, the Company's
Board of Directors shall always have at least two members who are neither
officers of Purchaser or the Company (or any of their respective affiliates) nor
designees of Purchaser (or any of its affiliates), nor shareholders or
affiliates of Purchaser, nor beneficial owners of 5% or more of any class of
capital stock of the Company (or any of their respective affiliates)
("Insiders"). At such time, the Company, if so requested, will use its best
efforts to cause persons designated by Purchaser to constitute the same
percentage of each committee of such board, each board of directors of each
subsidiary of the Company and each committee of each such board (in each case to
the extent of the Company's ability to elect such persons). This Information
Statement is required by Section 14(f) of the Exchange Act, and Rule 14f-1
promulgated thereunder.
For purposes of provisions of the Merger Agreement relating to termination
of the Merger, modification or amendment of the Merger Agreement, or waiver of
conditions to the Company's obligations to consummate the Merger, no action
taken by the Board of Directors of the Company prior to the Merger shall be
effective
A-1
26
unless such action is approved by the affirmative vote of at least a majority of
the directors of the Company who are not Insiders.
Pursuant to the Merger Agreement, on February 28, 1995, Merger Sub
commenced the Offer. The Offer is scheduled to expire at 12:00 midnight, New
York City time, on March 27, 1995, unless extended pursuant to the terms of the
Offer. The terms of the Merger Agreement, a summary of the events leading up to
the Offer and the execution of the Merger Agreement and other information
concerning the Offer and the Merger are contained in the Schedule 14D-9.
The information contained in this Information Statement concerning
Purchaser, Merger Sub and Purchaser Designees has been furnished to the Company
by such persons, and the Company assumes no responsibility for the accuracy or
completeness of such information.
INFORMATION WITH RESPECT TO THE COMPANY
The outstanding voting securities of the Company as of February 21, 1995
consisted of 8,558,474 shares of Class A Common Stock and 1,742,057 shares of
Class B Common Stock. Class A Common Stock and Class B Common Stock are
substantially similar, except as to voting rights. Except as required by the
Maine Business Corporations Act (the "MBCA") or otherwise provided in the
Company's Articles of Incorporation or By-Laws, voting power is vested solely
with the holders of shares of the Class B Common Stock. The holders of Class A
Common Stock are entitled only to such limited voting rights as are described
below. The holders of Class A Common Stock are entitled to elect 30% of the
total membership of the Company's Board of Directors (or the nearest larger
whole number if such percentage is not a whole number), and the holders of Class
B Common Stock are entitled to elect the remaining members of the Company's
Board of Directors. In addition, holders of Class A Common Stock and holders of
Class B Common Stock are entitled to vote together as a single class with
respect to the following matters: (a) the reservation of any shares of capital
stock of the Company for options granted or to be granted to officers, directors
or employees of the Company and (b) the acquisition of the stock or assets of
any other company if (i) any officer, director or holder of 10% or more of any
class of shares of Common Stock has a direct or indirect interest in the company
or assets to be acquired or in the consideration to be paid in the transaction,
(ii) the transaction involves the issuance of Class A Common Stock or Class B
Common Stock or securities convertible into either, or any combination of the
three, and the aggregate number of shares of Common Stock so issued together
with the Class B Common Stock which could be issued upon conversion of such
securities approximates, in the reasonable judgment of the Board of Directors of
the Company, 20% of the aggregate number of shares of Class A Common Stock and
Class B Common Stock outstanding immediately prior to such transaction or (iii)
the transaction involves the issuance of Class A Common Stock or Class B Common
Stock and any additional consideration, and if the value of the aggregate
consideration to be issued has, in the reasonable judgment of the Board of
Directors of the Company, a combined fair value of approximately 20% or more of
the aggregate market value of shares of Class A Common Stock and Class B Common
Stock outstanding immediately prior to such transaction (each a "Voting
Acquisition Transaction"). A separate class vote consisting of the holders of
Class A Common Stock and holders of Class B Common Stock is required for any
Voting Acquisition Transaction involving a merger or consolidation of the
Company. Each share of Class A Common Stock and Class B Common Stock is entitled
to one vote per share.
A-2
27
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 21, 1995 with
respect to the Shares beneficially owned by each person known by the Company to
be the beneficial owner of more than five percent of a class of the Company's
outstanding Common Stock.
TITLE OF CLASS AMOUNT AND NATURE PERCENT
NAME OF COMMON STOCK OF BENEFICIAL OWNERSHIP OF CLASS
- ---------------------------- --------------- ----------------------------------- --------
William Ziegler, III........ Class A(1) Aggregate Amount -- 1,330,098 15.5%
250 Harbor Drive Sole Voting Power -- 65,504 *
P.O. Box 10128 Shared Voting Power -- 1,264,594 14.8%
Stamford, CT 06904 Sole Investment Power -- 65,504 *
Shared Investment Power -- 1,264,594 14.8%
Class B(1) Aggregate Amount -- 949,920 54.5%
Sole Voting Power -- 73,762 4.2%
Shared Voting Power -- 876,158 50.3%
Sole Investment Power -- 73,762 4.2%
Shared Investment Power -- 876,158 50.3%
Helen Z. Steinkraus......... Class A(2) Aggregate Amount -- 1,257,989(3) 14.7%
250 Harbor Drive Sole Voting Power -- 3,394 *
P.O. Box 10128 Shared Voting Power -- 1,254,595 14.7%
Stamford, CT 06904 Sole Investment Power -- 3,394 *
Shared Investment Power -- 1,254,595 14.7%
Class B(2) Aggregate Amount -- 882,040(3) 50.6%
Sole Voting Power -- 5,883 *
Shared Voting Power -- 876,157 50.3%
Sole Investment Power -- 5,883 *
Shared Investment Power -- 876,157 50.3%
United States Trust......... Class A(4) Aggregate Amount -- 1,256,767 14.7%
Company of New York Sole Voting Power -- 0 --
114 West 47th Street Shared Voting Power -- 1,256,767 14.7%
New York, NY 10036 Sole Investment Power -- 0 --
Shared Investment Power -- 1,256,767 14.7%
14.7%
Class B(4) Aggregate Amount -- 876,158 50.3%
Sole Voting Power -- 0 --
Shared Voting Power -- 876,158 50.3%
Sole Investment Power -- 0 --
Shared Investment Power -- 876,158 50.3%
First Fidelity Bank......... Class A(5) Aggregate Amount -- 1,264,594 14.8%
P.O. Box 1297 Sole Voting Power -- 0 --
Stamford, CT 06904 Shared Voting Power -- 1,264,594 14.8%
Sole Investment Power -- 0 --
Shared Investment Power -- 1,264,594 14.8%
Class B(5) Aggregate Amount -- 876,158 50.3%
Sole Voting Power -- 0 --
Shared Voting Power -- 876,158 50.3%
Sole Investment Power -- 0 --
Shared Investment Power -- 876,158 50.3%
GIH Corp.................... Class A(6) Aggregate Amount -- 1,140,294 13.3%
250 Harbor Drive Sole Voting Power -- 1,140,294 13.3%
P.O. Box 10128 Shared Voting Power -- 0 --
Stamford, CT 06904 Sole Investment Power -- 1,140,294 13.3%
Shared Investment Power -- 0 --
Class B(6) Aggregate Amount -- 824,521 47.3%
Sole Voting Power -- 824,521 47.3%
Shared Voting Power -- 0 0
Sole Investment Power -- 824,521 47.3%
Shared Investment Power -- 0 0
A-3
28
TITLE OF CLASS AMOUNT AND NATURE PERCENT
NAME OF COMMON STOCK OF BENEFICIAL OWNERSHIP OF CLASS
- ---------------------------- --------------- ----------------------------------- --------
Archer Daniels Midland Co... Class A(7) Aggregate Amount -- 2,429,700 28.4%
4666 Faries Parkway Sole Voting Power -- 2,115,200 24.7%
P.O. Box 1470 Shared Voting Power -- 0 --
Decatur, IL 62525 Sole Investment Power -- 2,429,700 28.4%
Shared Investment Power -- 0 --
Marvin C. Schwartz.......... Class B(8) Aggregate Amount -- 143,300 8.2%
c/o Kenneth E. Leopold Sole Voting Power -- 143,300 8.2%
Neuberger & Berman Shared Voting Power -- 0 --
522 Fifth Avenue Sole Investment Power -- 143,300 8.2%
New York, NY 10036 Shared Investment Power -- 0 --
- ---------------
* Does not exceed one percent of the total outstanding shares of such class.
(1) Based upon Schedule 13G, Amendment No. 16, dated February 13, 1995, filed
with the Securities and Exchange Commission (the "SEC"). Mr. Ziegler reports
that he shares voting and investment power over 1,264,594 and 876,158 of
such shares of the Company's Class A Common Stock and Class B Common Stock,
respectively. Mr. Ziegler shares voting and investment power of such shares
with First Fidelity Bank ("First Fidelity") as co-trustees of two trusts
(the "Ziegler Trusts"). Of such shares, 1,140,294 shares of the Company's
Class A Common Stock and 824,521 shares of the Company's Class B Common
Stock are owned by GIH Corp. ("GIH"). GIH is wholly owned by Mr. Ziegler,
Mrs. Steinkraus and the co-trustees of the Ziegler Trusts and the Steinkraus
Trusts.
(2) Based upon Schedule 13D, Amendment Nos. 1 and 3, dated March 2, 1992, filed
with the SEC and information received from United States Trust Company of
New York ("U.S. Trust"). Mrs. Steinkraus and U.S. Trust report that she
shares voting and investment power over 1,254,595 and 876,157 of such shares
of the Company's Class A Common Stock and the Company's Class B Common
Stock, respectively. Mrs. Steinkraus shares such voting and investment power
with U.S. Trust as co-trustees of two trusts (the "Steinkraus Trusts"). Of
such shares, 1,140,294 shares of the Company's Class A Common Stock and
824,521 shares of the Company's Class B Common Stock are owned by GIH. GIH
is wholly owned by Mr. Ziegler, Mrs. Steinkraus and the co-trustees of the
Ziegler Trusts and the Steinkraus Trusts.
(3) Excludes 132.25 shares of the Company's Class A Common Stock owned by Eric
M. Steinkraus and 695 shares of the Company's Class B Common Stock owned by
Philip C. Steinkraus (based upon Schedule 13D, Amendment Nos. 1 and 3, dated
March 2, 1992, filed with the SEC by Helen Z. Steinkraus, Eric M. Steinkraus
and Philip C. Steinkraus, who stated therein that they are members of a
group and have executed a joint filing agreement pursuant to Rule 13d-1(f)
under the Securities Exchange Act of 1934).
(4) Based upon Schedule 13G, Amendment No. 16, dated February 11, 1995, filed
with the SEC. U.S. Trust reports that it shares voting and investment power
with Mrs. Steinkraus as co-trustee of certain trusts. Included in such
shares are 1,140,294 shares of the Company's Class A Common Stock and
824,521 shares of the Company's Class B Common Stock owned by GIH.
(5) Based upon Schedule 13G dated April 8, 1994, filed with the SEC.
(6) Based upon Schedule 13G, Amendment No. 16, dated February 24, 1995, filed
with the SEC. See also Footnote Nos. 1 and 2 above.
(7) Based upon Schedule 13D, Amendment No. 7, dated September 17, 1993, filed
with the SEC.
(8) Based upon Schedule 13D, Amendment No. 1, dated January 10, 1991, filed with
the SEC.
A-4
29
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of February 21, 1995,
as to shares of Common Stock beneficially owned by the Company's directors, the
Chief Executive Officer of the Company, and each of the four most highly
compensated executive officers, other than the Chief Executive Officer, and all
officers and directors of the Company as a group. Unless otherwise indicated in
the footnotes, each of the following persons has sole voting and investment
power with respect to the shares of the Company's Common Stock set forth in the
table.
TITLE OF CLASS AMOUNT AND NATURE PERCENT
NAME OF COMMON STOCK OF BENEFICIAL OWNERSHIP OF CLASS
- ----------------------------------------------- --------------- ----------------------- --------
William Ziegler, III........................... Class A 1,330,098(1)(2) 15.5%
Class B 949,920(1)(3) 54.5%
Charles B. Cook, Jr............................ Class A 2,336 *
Class B 2,669 *
Jane E. Downey................................. Class A 15,395(2) *
Class B -0- --
Paul F. Engler................................. Class A 2,500 *
Class B -0- --
James E. Harwood............................... Class A 1,000 *
Class B -0- --
John R. Kennedy................................ Class A 800 *
Class B 200 *
Charles A. Koons............................... Class A 16,083(2) *
Class B -0- --
Leslie C. Liabo................................ Class A 14,475(2) *
Class B 3,875 *
Patric J. McLaughlin........................... Class A 106,672(2) 1.3%
Class B -0- --
C. Alan MacDonald.............................. Class A 1,000 *
Class B -0- --
H. Barclay Morley.............................. Class A 2,500 *
Class B -0- --
Edward P. Norris............................... Class A 48,042(2) *
Class B -0- --
William L. Rudkin.............................. Class A 1,000(4) *
Class B -0- --
Wendell M. Smith............................... Class A -0- --
Class B 100 *
William C. Steinkraus.......................... Class A 110(5) *
Class B -0-(5) --
Robert M. Stephan.............................. Class A 20,117(2) *
Class B -0- --
Raymond S. Troubh.............................. Class A 3,000 *
Class B 500 *
All directors and officers as a group.......... Class A 1,643,851 19.2%
Class B 957,264 55.0%
- ---------------
* Does not exceed one percent of the total outstanding shares of such class.
(1) Based upon Schedule 13G, Amendment No. 16, dated February 13, 1995, filed
with the SEC. Mr. Ziegler reports that he shares voting and investment power
over 1,264,594 and 876,158 of such shares of the Company's Class A Common
Stock and Class B Common Stock, respectively. Mr. Ziegler shares voting and
investment power of such shares with First Fidelity as co-trustees of the
Ziegler Trusts. Of such shares, 1,140,294 shares of the Company's Class A
Common Stock and 824,521 shares of the
A-5
30
Company's Class B Common Stock are owned by GIH. GIH is wholly owned by Mr.
Ziegler, Mrs. Steinkraus and the co-trustees of the Ziegler Trusts and the
Steinkraus Trusts.
(2) Includes the following shares of the Company's Class A Common Stock that may
be acquired within 60 days pursuant to the exercise of options: Ms. Downey,
14,400 shares; Mr. Koons, 15,300 shares; Mr. Liabo, 8,000 shares; Mr.
McLaughlin, 96,000 shares: Mr. Norris, 36,750 shares; Mr. Stephan, 15,000
shares; Mr. Ziegler, 54,948 shares; and all directors and officers as a
group, 304,498 shares. Also includes shares of the Company's Class A Common
Stock credited under the Company's capital accumulation plan through
December 31, 1994 as follows: Ms. Downey, 995.4392 shares, Mr. McLaughlin,
8,666.5407 shares; Mr. Koons, 783.0609 shares; Mr. Norris, 11,167.1858
shares; and Mr. Stephan, 2,116.6837 shares.
(3) Excludes 1,003 shares of the Company's Class B Common Stock owned by Mr.
Ziegler's wife. Mr. Ziegler disclaims beneficial ownership of such shares.
(4) Excludes 587 shares of the Company's Class A Common Stock owned by Mr.
Rudkin's wife. Mr. Rudkin disclaims beneficial ownership of such shares.
(5) Excludes shares of the Company's Class A and Class B Common Stock owned by
Mrs. Steinkraus and disclosed above. Mr. Steinkraus disclaims beneficial
ownership of such shares.
DIRECTORS AND EXECUTIVE OFFICERS
PURCHASER DESIGNEES
As of the date of this Information Statement, Purchaser has not determined
who will be Purchaser Designees. However, it is expected that Purchaser
Designees shall be selected from among the directors and executive officers of
Purchaser and its affiliates. Certain information regarding the list of
candidates as Purchaser Designees will be provided at a later date when such
information becomes available. It is expected that the Purchaser Designees will
assume office promptly following the purchase by Purchaser pursuant to the Offer
and the Stock Purchase Agreement of such number of shares as represents at least
a majority of the outstanding shares of both the Company's Class A Common Stock
and Class B Common Stock.
A-6
31
CURRENT AND CONTINUING DIRECTORS
The following table sets forth the ages (as of February 21, 1995) and other
information with respect to the current directors of the Company.
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------- --- --------------------------------------- --------
CLASS A DIRECTORS
PAUL F. ENGLER (1)................... 65 President and Chief Executive Officer 1993
of Cactus Feeders, Inc. (farming,
ranching and cattle feeding).
JOHN R. KENNEDY...................... 64 President, Chief Executive Officer and 1992
a director of Federal Paper Board
Company, Inc. (paper and wood
products). Also a director of
DeVliegBullard, Inc., First Fidelity
Bancorporation, Magma Copper Company
and Chase Brass Industries, Inc.
WILLIAM L. RUDKIN (1)................ 68 Retired Chairman of Pepperidge Farm 1993
Incorporated (consumer food products).
WENDELL M. SMITH..................... 59 Chairman and Chief Executive Officer of 1993
Baldwin Technology Company, Inc.
(manufacturer of printing press
controls and accessories). Also a
director of Bowne & Company.
CLASS B DIRECTORS
CHARLES B. COOK, JR.................. 65 Vice Chairman and a director of Janney 1964
Montgomery Scott Inc. (investment
bankers).
JAMES E. HARWOOD..................... 58 President, Sterling Equities, Inc. 1992
(venture capitalists and management
advisors); formerly Corporate Vice
President of Technical Operations of
Schering Plough Corporation. Also a
director of Morgan Keegan & Company and
Leader Financial Corporation Inc.
LESLIE C. LIABO (1).................. 71 Former Vice Chairman of the Board of 1975
the Company (1986-1993)
C. ALAN MACDONALD.................... 61 General Partner, The Marketing 1992
Partnership, Inc.; formerly Chairman
and Chief Executive Officer of Lincoln
Snacks Company (1992-1994) and
President and Chief Executive Officer
of Nestle Foods Corporation. Also a
director of Lord Abbett & Company,
Fountainhead Water Company, J.B.
Williams Company, Great American
Restaurants and Lincoln Snacks Company.
PATRIC J. MCLAUGHLIN(1).............. 49 President and Chief Executive Officer 1988
of the Company since July 1, 1993;
formerly President and Chief Operating
Officer of the Company (1992-1993) and
President of its Corn Processing
Division (1984-1992).
A-7
32
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------- --- --------------------------------------- --------
H. BARCLAY MORLEY.................... 65 Retired Chairman and Chief Executive 1991
Officer of Stauffer Chemical Company.
Also a director of Champion
International Corporation, Schering
Plough Corporation and The Bank of New
York Company.
WILLIAM C. STEINKRAUS (1)(2)......... 69 Private investor and Chairman Emeritus 1980
of United States Equestrian Team,
Incorporated, a charitable organization
responsible for providing United States
international equestrian
representation.
RAYMOND S. TROUBH.................... 68 Financial consultant. Also a director 1992
of ADT Limited; America West Airlines,
Inc.; Applied Power Incorporated; ARIAD
Pharmaceuticals, Inc.; Becton,
Dickinson and Company; Benson Eyecare
Corporation; Foundation Health
Corporation; General American Investors
Company, Inc.; Manville Corporation;
The Olsten Corporation; Petrie Stores
Corporation; Riverwood International
Corporation; Time Warner Inc.; Triarc
Companies, Inc.; and WHX Corporation.
WILLIAM ZIEGLER, III (1)(2).......... 66 Chairman of the Board of the Company 1958
since 1964; formerly Chief Executive
Officer of the Company (1976-1993).
- ---------------
(1) Member of the Executive Committee.
(2) Mr. Ziegler and Mr. Steinkraus's wife are brother and sister.
AGREEMENTS AFFECTING BOARD MEMBERSHIP
The Company's Class B Common Stock has the power to elect 70% of the
Company's Board of Directors. GIH Corp. owns approximately 13.4% of the Class A
Common Stock and approximately 47.3% of the Class B Common Stock. All the shares
of GIH Corp. are held directly by, or in various trusts for the benefit of,
William Ziegler, III and his sister, Mrs. Helen Steinkraus.
Control over GIH Corp. is the subject of litigation initiated in New York
Surrogate's Court by the children of Mrs. Helen Steinkraus challenging the prior
distribution of the controlling share of GIH Corp. common stock to a trust for
the benefit of William Ziegler, III. On April 4, 1994, the New York Surrogate's
Court issued a decision in favor of Mr. Ziegler, and Mrs. Steinkraus' children
have filed an appeal of such decision. The appeal was argued on February 15,
1995.
Until the final resolution of the litigation described above, Mr. Ziegler,
Mrs. Steinkraus and GIH Corp. agreed in March, 1991 that their shares of the
Company will be voted for directors nominated by the Company in accordance with
the succession resolutions adopted by the Board of Directors in March, 1991. The
resolutions provide for Board seats for Mr. Ziegler and Mrs. Steinkraus or their
designees and require that the majority of the Board consist of directors who
are neither employees of the Company nor members of the Ziegler or Steinkraus
families.
Mr. Ziegler has informed the Board of Directors of the Company that it is
his position that the March, 1991 agreement is no longer in effect as a result
of the Surrogate's Court decision. The Company believes that the March, 1991
agreement remains in effect. See the Schedule 14D-9 for further information with
respect to the dispute over the control of GIH Corp.
A-8
33
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES THEREOF
The Board of Directors held twelve meetings during 1994. Attendance at
Board meetings averaged 96.2% and attendance at Board committee meetings
averaged 86.5%. Each incumbent director attended at least 75% of the Board
meetings and the meetings of Board committees on which the director served. The
principal standing committees of the Board are the Executive Committee, Audit
Committee, Compensation Committee and Pension Committee.
Executive Committee. The Executive Committee consists of six directors:
William L. Rudkin (Chair), Paul F. Engler, Leslie C. Liabo, Patric J.
McLaughlin, William C. Steinkraus and William Ziegler, III. Pursuant to the
By-Laws, the Executive Committee has all the powers and authority of the Board
of Directors in the management of the business and affairs of the Company,
except those powers which, by law, cannot be delegated by the Board of
Directors. The Executive Committee also serves as the nominating committee of
the Board of Directors. In this capacity it selects potential candidates for
director subject to ratification by the Board of Directors. The Executive
Committee considers shareholder recommendations for directors. The Executive
Committee met seven times in 1994.
Audit Committee. The Audit Committee consists of five directors: Wendell
M. Smith (Chair), Paul F. Engler, James E. Harwood, John R. Kennedy and Raymond
S. Troubh. The Audit Committee meets independently with the Company's internal
auditing staff, with senior management and with representatives of the Company's
independent accountants. The Audit Committee recommends the engagement or
discharge of the Company's independent accountants; reviews the scope, fees, and
results of the annual audit; reviews the performance of additional services by
the Company's independent accountants; monitors compliance with corporate
policies; and reviews the effectiveness of the Company's internal control
systems. The Audit Committee met four times in 1994.
Compensation Committee. The Compensation Committee consists of five
directors: H. Barclay Morley (Chair), Charles B. Cook, Jr., John R. Kennedy, C.
Alan MacDonald and William L. Rudkin. The committee approves the compensation of
officers and other senior executives, including salary, incentive bonus, and
stock options, in accordance with the Company's stock option and management
incentive plans. The Compensation Committee met four times in 1994. (See below
for the committee's report on 1994 compensation of executive officers.)
Pension Committee. The Pension Committee consists of six directors;
Charles B. Cook, Jr. (Chair), Paul F. Engler, James E. Harwood, Leslie C. Liabo,
C. Alan MacDonald and William Ziegler, III. The Pension Committee is responsible
for supervision of the investment of all assets held by the Company's pension
and savings plans. The Pension Committee met three times in 1994.
Directors who are not employees of the Company or its subsidiaries are paid
an annual retainer of $15,000 plus an attendance fee of $1,000 for each Board
meeting and each Board committee meeting. Directors are also reimbursed for
travel expenses to attend Board and committee meetings. Committee chairs receive
additional annual retainers ranging from $5,000 to $12,000. In lieu of the
annual director's retainer and Executive Committee attendance fees, Mr.
MacDonald received until October 1994 an annual retainer of $120,000 and was
granted 20,000 stock appreciation rights for his service as a director and
Chairman of the Executive Committee. In lieu of the annual director's retainer
and Board meeting attendance fees, Mr. Ziegler receives an annual retainer of
$120,000, use of an office and part-time secretarial support and use of a club
membership for his service as a director and Chairman of the Board.
Directors with five years or more of service as a non-employee member of
the Board participate in a directors' retirement plan that provides eligible
directors, upon retirement, with an annual retirement income equal to 50-100%
(depending on the number of years served) of the director's highest twelve
monthly consecutive retainers paid during the last 120 months of Board service.
For purposes of this calculation, the current annual retainer for the Chairman
of the Board is deemed to be $15,000.
A-9
34
CERTAIN LEGAL PROCEEDINGS
On February 22, 1995, William Ziegler, III, Chairman of the Board of the
Company, on behalf of himself and, purportedly, GIH Corp., filed suit in
Superior Court, Cumberland County, Maine seeking declaratory and injunctive
relief against the Merger Agreement, the Stock Purchase Agreement and the
transactions contemplated thereby. The complaint, entitled GIH Corp. and William
Ziegler, III v. American-Maize Products Co. et. al., alleges that the approval
by the remaining members of the Company's Board of Directors of the Merger
Agreement and Stock Purchase Agreement and their authorization of "break-up" fee
provisions in the Merger Agreement constituted a breach of their fiduciary
duties. The complaint asserts that the proposed issuance of additional shares of
Class B Common Stock by the Company pursuant to the Stock Purchase Agreement is
ultra vires and requests the court to declare such issuance unlawful and void.
The complaint also alleges that the defendant directors' approval of certain
termination agreements with senior officers of the Company violated the
directors' fiduciary duties. The Company believes all of the claims contained in
the complaint are without merit and intends to defend against them vigorously.
In January 1995, alleged shareholders of the Company filed complaints in
Connecticut Superior Court in three purported class actions against the Company
and its Board of Directors, entitled Kenneth Steiner and William Steiner v.
American Maize-Products Co., et al., Alan Katz v. American Maize-Products Co.,
et al. and Mitchell Saltzman and Miriam Sarnoff v. American Maize-Products Co.,
et al. The actions allege that the Company's Board of Directors breached its
fiduciary duties to shareholders by not adequately considering Purchaser's
initial offer on December 19, 1994 to acquire the Company at a purchase price of
$32 per share, by rejecting such offer, by failing to make adequate disclosure
of the Offer and by placing personal interests, including an alleged attempt by
Mr. Ziegler to retain control of the Company, ahead of the interest of the
public shareholders. The complaints seek equitable relief and unspecified
damages. The Company believes that the allegations in the complaint are without
merit and intends to defend the actions vigorously.
EXECUTIVE OFFICERS
Set forth below is the age as of February 21, 1995 and certain other
information regarding each person, currently serving as an executive officer of
the Company.
NAME AGE TITLE
-------------------------------------- --- --------------------------------------
William Ziegler, III(1)............... 66 Chairman of the Board
Patric J. McLaughlin(1)............... 49 President and Chief Executive Officer
Robert A. Britton..................... 48 Vice President, Treasurer and
Assistant Secretary
Jane E. Downey........................ 44 Vice President -- Human Resources
Thomas H. Fisher...................... 48 Director of Taxes
Edmond G. Herve, Jr................... 45 Controller
Charles A. Koons...................... 51 Vice President -- Corporate
Development and Planning
Edward P. Norris...................... 54 Vice President and Chief Financial
Officer
Robert M. Stephan..................... 52 Vice President, General Counsel and
Secretary
- ---------------
(1) Member of Board of Directors and its Executive Committee
Messrs. Britton, Herve, Fisher, Koons and Norris have served in their
respective capacities with the Company for more than the past five years.
Mr. Ziegler retired as Chief Executive Officer effective July 1, 1993 and
remains Chairman of the Board of Directors; prior thereto he served as Chairman
and Chief Executive Officer since 1976.
Mr. McLaughlin was elected President and Chief Executive Officer of the
Company effective July 1, 1993; prior thereto he served as President and Chief
Operating Officer (1992-1993) and President of the Corn Processing Division
(1984-1992).
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35
Ms. Downey was elected Vice President -- Human Resources of the Company
effective August 1, 1993; prior thereto she served as Vice President -- Human
Resources of the Corn Processing Division (1988-1993).
Mr. Stephan was elected Vice President and General Counsel of the Company
in April, 1992 and Secretary in January, 1995. Prior thereto he served as Vice
President, General Counsel and Secretary of Erbamont, N.V. since 1983.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company subleases office space to and shares certain office facilities
with GIH Corp., of which Mr. Ziegler is President, for an annual fee of
approximately $15,000. Swisher International, Inc., a subsidiary of the Company,
has engaged the consulting services of Mr. Harwood in its business and paid Mr.
Harwood $30,000 in 1994 for such services. During 1994, the Company and its
subsidiaries have had purchase, sale, financial and other transactions in the
normal course of business with companies or organizations (including their
affiliates) with which some of the Company's directors are associated, including
the following: Champion International Corporation, The Bank of New York Company
and Janney Montgomery Scott Inc. To the best of the Company's knowledge, none of
the above transactions resulted in aggregate payments that were large enough to
require disclosure of such transactions by the Company. Management believes that
all of the above transactions were on terms that were reasonable and
competitive. Additional transactions of this nature may be expected to take
place in the ordinary course of business in the future.
In connection with his relocation from Illinois to Connecticut, Mr.
McLaughlin was granted a housing loan by the Company on April 29, 1993 in the
amount of $150,000 payable in three equal annual installments commencing April
29, 1994 with interest at the rate of 5.24% per annum. The note is secured by a
second mortgage on Mr. McLaughlin's principal residence.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and any persons who are beneficial owners of more than ten percent of
any class of the Company's Common Stock, to report their initial ownership of
Common Stock and any subsequent changes in that ownership to the SEC and the
American Stock Exchange. Based solely on the Company's review of forms submitted
to the Company in accordance with the Exchange Act, and the representations of
its officers and directors, the Company believes that all of its officers,
directors and greater than ten percent beneficial owners complied with all
filing requirements applicable to them with respect to transactions during the
fiscal year 1994.
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EXECUTIVE COMPENSATION
The following table sets forth compensation paid or awarded during the last
three fiscal years to the Chief Executive Officer and the four other most highly
compensated executive officers of the Company in 1994.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------
------------------------------------- SECURITIES
OTHER UNDERLYING ALL OTHER
NAME AND ANNUAL OPTIONS/ COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) SARS(2) SATION(3)
- -------------------------- ----- -------- -------- --------------- ------------------ ------------
($) ($) ($) (#) ($)
Patric J. McLaughlin...... 1994 $420,000 $396,000 $37,854 30,000 $ 34,489
President and Chief 1993 350,000 272,000 27,120 20,000 28,848
Executive Officer 1992 254,000 157,000 11,808 10,000 22,204
Edward P. Norris.......... 1994 206,000 127,200 39,922 12,000 29,120
Vice President and Chief 1993 185,850 108,000 36,224 6,000 29,356
Financial Officer 1992 166,100 98,000 20,211 3,000 29,025
Robert M. Stephan(4)...... 1994 177,250 108,000 30,775 7,000 27,120
Vice President, General 1993 166,750 94,000 28,733 5,000 27,165
Counsel and Secretary 1992 124,058 70,000 16,328 3,000 23,441
Charles A. Koons.......... 1994 148,000 79,500 28,253 5,000 22,920
Vice President,
Corporate 1993 140,500 68,000 27,138 3,000 22,620
Development and
Planning............. 1992 132,000 63,000 15,520 3,000 22,280
Jane E. Downey(5)......... 1994 125,000 69,300 51,474 6,000 45,860
Vice President, 1993 108,333 60,000 16,963 4,000 23,473
Human Resources
- ---------------
(1) Amounts in this column represent tax reimbursements on life insurance and
company automobiles. The amounts with respect to life insurance are as
follows: Mr. McLaughlin $23,126; Mr. Norris $22,540; Mr. Stephan $17,119;
Mr. Koons $13,858 and Ms. Downey $33,309.
(2) All amounts in this column represent option grants and all such options were
immediately exercisable (see Option Grants in Last Fiscal Year and
Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values
tables).
(3) Amounts in this column represent the following items as set forth in the
table below: (a) Company contributions to the executive's 401(k) plan
account (b) universal life insurance premiums paid by the Company on
policies owned by the executives.
PATRIC J. EDWARD P. ROBERT M. CHARLES A. JANE E.
1994 MCLAUGHLIN NORRIS STEPHAN KOONS DOWNEY
------------------------------------- ---------- --------- --------- ---------- -------
401(k) Contribution.................. $ 6,120 $ 6,120 $ 6,120 $ 5,920 $ 5,000
Life Insurance Premiums.............. 28,369 23,000 21,000 17,000 40,860
---------- --------- --------- ---------- -------
$ 34,489 $29,120 $27,120 $ 22,920 $45,860
(4) Mr. Stephan was elected Secretary of the Company on January 25, 1995 and
Vice President and General Counsel of the Company on April 24, 1992. Prior
thereto, he served for a one-month period as Vice President and Associate
General Counsel of the Company.
(5) Ms. Downey was elected Vice President, Human Resources on August 1, 1993.
Prior thereto she served as Vice President -- Human Resources of the
Company's Corn Processing Division (1988-1993).
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STOCK OPTION TABLES
The following tables provide information with respect to stock options
granted to, exercised or held by the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------------
NAME GRANTED(1) IN 1994 $/SH DATE 5%($) 10%($)
- --------------------------- ---------- ---------- -------- ---------- -------- ----------
Patric J. McLaughlin....... 30,000 17.80% $20.00 6/29/04 $646,200 $1,384,200
Edward P. Norris........... 12,000 7.12 20.00 6/29/04 258,480 553,680
Robert M. Stephan.......... 7,000 4.15 20.00 6/29/04 150,780 322,980
Charles A. Koons........... 5,000 2.97 20.00 6/29/04 107,700 230,700
Jane E. Downey............. 6,000 3.56 20.00 6/29/04 129,240 276,840
- ---------------
(1) All amounts in this column represent option grants and all such options were
immediately exercisable.
(2) Potential realizable value is based on the assumed annual growth of the
Company's Class A Common Stock for the ten-year option term. Annual growth
of 5% results in a stock price of $41.54 per share and 10% results in a
price of $66.14 per share. Actual gains, if any, on stock option exercises
are dependent on the future performance of the stock. There can be no
assurance that the amounts reflected in this table will be achieved.
The following table details the value on December 31, 1994 of options to
purchase Common Stock held by those persons named in the Summary Compensation
Table above.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT FISCAL YEAR-END OPTIONS AT YEAR-END
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- -------- -------- ----------- ------------- ----------- -------------
Patric J. McLaughlin............. 2,750 $8,415 96,000 0 $ 779,156 0
Edward P. Norris................. 750 2,389 36,750 0 285,576 0
Robert M. Stephan................ 0 0 15,000 0 96,000 0
Charles A. Koons................. 0 0 15,300 0 85,563 0
Jane E. Downey................... 0 0 14,400 0 91,606 0
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RETIREMENT BENEFITS
The approximate annual retirement benefits provided under Company
retirement plans for employees in higher salary classifications retiring from
the Company at age 62 or later are shown in the table below.
EARNINGS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 OR MORE
CREDITED FOR OF OF OF OF YEARS OF
RETIREMENT BENEFITS SERVICE SERVICE SERVICE SERVICE SERVICE
- ------------------- -------- -------- -------- -------- ----------
$ 100,000 $ 18,568 $ 27,775 $ 36,981 $ 46,188 $ 55,395
150,000 29,175 43,595 58,014 72,434 86,853
250,000 50,389 75,234 100,080 124,925 149,770
350,000 71,603 106,874 142,145 177,416 212,687
450,000 92,817 138,513 184,210 229,906 275,603
550,000 114,031 170,153 226,275 282,397 338,520
650,000 135,245 201,793 268,341 334,888 401,436
750,000 156,458 233,432 310,405 387,379 464,352
850,000 177,672 265,071 352,471 439,870 527,269
The amounts of earnings credited for retirement benefits ("Credited
Earnings") are essentially salaries and bonuses as shown in the Summary
Compensation Table above. The calculation of each individual's "Credited
Earnings" is based on the highest consecutive 60 months during his or her last
120 months of employment.
The amounts shown in the table are 10 year certain and continuous benefits,
converted to straight life annuities. Pay is assumed to remain constant to
Normal Retirement Date. The figures shown are not limited by any law or
regulation such as Section 415(b) and (e) or Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended. The benefits shown reflect the total benefit
to be paid under both the 1952 Plan and the Supplemental Plan.
As of December 31, 1994, the executive officers named in the Summary
Compensation Table had the following credited years of service under the
retirement plan: Mr. McLaughlin 20.5 years; Mr. Norris 16.8 years, Mr. Stephan
2.8 years, Mr. Koons 18.0 years, and Ms. Downey 6.3 years.
PERFORMANCE MEASUREMENT COMPARISON
The following Performance Graph compares the Company's cumulative total
shareholder return on its Common Stock for a five-year period (1989-1994) with
the cumulative total return of the Wilshire 5000 stock index and the Russell
2000 stock index. The graph assumes that $100 was invested on December 31, 1989
in the Company's Class A Common Stock and that $100 was invested at that time in
each of the indexes. The comparison assumes that all dividends are reinvested.
The graph below shall not be deemed to be incorporated by reference into
any filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates such performance graph by reference, and shall
not otherwise be deemed filed under such Acts.
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PERFORMANCE GRAPH
MEASUREMENT PERIOD AMERICAN
(FISCAL YEAR COVERED) MAIZE WILSHIRE 5000 RUSSELL 2000
1989 100.00 100.00 100.00
1990 104.61 93.82 80.49
1991 118.16 125.91 117.56
1992 127.04 137.20 139.21
1993 90.41 152.68 165.52
1994 152.39 152.58 162.51
The Company actively operates in two business segments: (i) the corn wet
milling business, in which it manufactures and markets corn syrup, high fructose
corn syrup, corn starch and other corn derivatives, principally for use in
manufacturing processes in a variety of industries and (ii) the manufacture and
sale of consumer tobacco products through which the Company manufactures and
markets cigars and various smokeless tobacco products.
The Company does not believe there is either a published industry or
line-of-business mix or a group of companies whose overall business is
sufficiently similar to the Company's business to allow a meaningful benchmark
against which the Company can be compared. Competitors in each of the Company's
two business segments either operate in other, completely unrelated, businesses
or have a significantly different product index, effectively making overall
competitive comparisons from public information misleading. For these reasons,
the Company has elected to use a published index of companies of similar market
capitalization -- the Russell 2000 -- rather than a peer group, in addition to
the Wilshire 5000 broad equity market index. The Russell 2000 index has a median
market capitalization of approximately $130,000,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Overview
The Compensation Committee of the Board of Directors (the "Committee") has
the responsibility for the design, implementation and administration of the
Company's executive compensation program. The Committee is comprised entirely of
outside independent directors.
The objective of the Company's executive compensation program is to attract
and retain the management talent necessary to maximize long-term profitability
and shareholder value. The program is designed to accomplish this objective
through plans that (i) motivate senior managers, and align their interests with
those of the Company's shareholders, by tying incentive compensation to Company
profitability and individual performance and (ii) provide a base level of
compensation that is competitive with other industrial companies in similar
businesses as well as a cross section of general industry.
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Elements of Compensation
The three principal components of the Company's executive compensation
program are salary, annual incentives and stock options, each of which is
discussed in detail below.
1. Salary
Of the three elements of executive compensation, salary is the least
affected by Company performance; although it is very much dependent on
individual performance. Salary is intended to provide a base level of
compensation that is competitive at the market median with companies of similar
type, particularly those in the food and kindred products industry group and
capital intensive process industries. The Committee reviews and approves salary
levels and increases for each employee of the Company and its subsidiaries whose
base salary exceeds $100,000.
Following a procedure used for all salaried employees of the Company, each
of the executive officers is assigned a salary range for his or her particular
job. The range is set at 80% to 120% of the median market value of the position.
The median market value is established by an evaluation of the degree of
accountability, expertise and problem solving required in each position and the
results of salary surveys conducted by major compensation consultants and
associations. The salary ranges are reviewed annually using current survey data
to determine the amount of adjustment, if any.
Individual salaries are reviewed every 9 to 18 months. The timing and
amount of any increase to salaried employees, including executive officers, are
both dependent upon (i) the performance of the individual and, to a lesser
extent (ii) the relationship of his or her actual salary to the midpoint of the
salary range.
Executive officer salaries are recommended by the Chief Executive Officer
and reviewed and approved by the Committee. The Chief Executive Officer's
recommendations on the amount of increase are based on his subjective evaluation
of each individual's performance in his or her respective functional area.
During 1994 the Committee concurred with and approved all salary recommendations
made by the Chief Executive Officer.
In determining Mr. McLaughlin's salary increase on July 1, 1994, the
Committee considered an executive compensation study prepared by an outside
compensation consultant. The Committee rated Mr. McLaughlin's performance based
on its evaluation of his contribution to the successful operations of the
Company during the preceding year. Mr. McLaughlin's base salary is subject to
the terms of his employment agreement. See "Employment Agreements".
2. Annual Incentives
The executive officers of the Company all participate in a Management
Incentive Plan under which annual cash bonuses are paid, based on the
achievement of specific financial and/or operational targets and each
participant's individual performance. The current plan was established in 1994
with the assistance of an outside compensation consultant.
For each business unit, bonuses are based on the achievement of financial
performance targets and individual performance goals. The financial objectives
are developed by the Committee during the first quarter of the year.
Each participant in the plan has a target bonus opportunity that is
expressed as a percentage of his or her base salary. The target bonus
opportunity ranges from 20% to 60% and is based on the potential of the position
to have a positive impact on the performance of the Company.
Seventy percent of the target bonus opportunity is tied directly to the
financial performance of the participant's business unit. The remaining thirty
percent of the target bonus opportunity is made available if certain thresholds
related to financial performance are met, and is awarded on a discretionary
basis that recognizes individual contributions.
A-16
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Performance above goal increases actual bonus awards, up to a maximum of
150% of the target bonus. Performance below goal decreases actual bonus awards,
and they are reduced to zero in the event the financial results are sufficiently
below target.
The discretionary portion of each participant's bonus is based on his or
her individual performance during the year. Individual performance ratings are
recommended to the Committee by management. The Committee sets Mr. McLaughlin's
performance rating based on its evaluation of the overall Company performance
during the year and its evaluation of his performance in relation to the
specific objectives which were set for him for the award year.
The Committee awarded Mr. McLaughlin a bonus of 150% of his target bonus
opportunity, based on the excellent performance of the Company in 1994.
3. Stock Options
Stock options are designed to provide long-term incentives and rewards tied
to increases in the price of the Company's common stock. The Committee believes
that stock options, which provide value to the participants only when the
Company's shareholders benefit from stock price appreciation, are an integral
component of the Company's executive compensation program.
Approximately 70 key employees, including the executive officers,
participate in shareholder-approved stock option plans. Stock options are issued
at an exercise price equal to 100% of the fair market value of the Company's
common stock on the date of grant. Options granted under the plans have terms of
up to ten years and may expire earlier in the event of termination of
employment.
In determining the 1994 stock option recipients and the overall number of
options granted, the Committee reviewed the details of the last two stock option
grants. The factors considered in awarding the specific number of options to
each participant included the individual's total compensation, organizational
level, and his or her potential for contributing to the successful operations of
the Company. The options granted were all incentive stock options except where
the limits of the plan and IRS regulations required the granting of
non-qualified options.
The Committee awarded Mr. McLaughlin 30,000 options in 1994 to recognize
his direct involvement in enhancing the operations of the Company.
Compliance with Internal Revenue Code Sections 162(m). Section 162(m) of
the Code, effective in 1994, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. Absent extraordinary circumstances, the
Company's current compensation programs are not likely to trigger the $1 million
limit on deductibility. Future grants of stock options, stock appreciation
rights and restricted stock under the 1994 Stock Plan would not be subject to
the deduction limit. The Company will consider whether new compensation programs
should be structured in a manner that would be exempt from the deduction limit
at the time such programs are designed.
Compensation Committee
H. Barclay Morley, Chair
Charles B. Cook, Jr.
John R. Kennedy
C. Alan MacDonald
William L. Rudkin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee are current or former
employees of the Company or its affiliates.
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EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Patric J. McLaughlin
as President and Chief Executive Officer (the "Agreement") commencing July 1,
1993 and terminating June 30, 1996, subject to automatic one-year extensions on
each anniversary date until July 1, 2000. The Agreement provides for a base
salary of $400,000 per annum, subject to annual reviews by the Compensation
Committee, plus an annual incentive bonus under the Company's management
incentive plan with a bonus "target" rate at 50% of base salary. Under the
Agreement, in the event Mr. McLaughlin's employment is terminated without
"cause," he shall be entitled to severance benefits until the Agreement's
termination date, including (i) salary, (ii) target bonus payments and (iii)
continued participation in welfare benefit plans, retirement plans and the
Company's 401(k) Plan. In such case, stock options awarded prior to his
termination without "cause" shall remain exercisable until the earlier of their
expiration date or the third anniversary of the termination of his employment.
In the event of termination of employment for "cause" or due to death or
disability, the Company shall not be obligated to make any severance payments to
Mr. McLaughlin. The Agreement provides that the Company will pay an amount
necessary to reimburse Mr. McLaughlin, on an after tax basis, for any excise tax
due under Section 4999 of the Code as a result of any payment under the
Agreement being treated as a "parachute payment" under Section 280G of the Code.
The Agreement contains provisions relating to nondisclosure of confidential
information by Mr. McLaughlin and nonsolicitation of Company employees for a
period of two years after his termination. The Agreement is not assignable by
either party, but is binding upon successors of the Company.
The Company entered into employment agreements with Jane E. Downey, Charles
A. Koons, Edward P. Norris, Robert M. Stephan and three other executive officers
of the Company (the "Agreements") commencing as of January 2, 1995 and
terminating December 31, 1997 subject to automatic one-year extensions as of
December 31, 1995 and each December 31st thereafter, unless timely notice is
given that the term shall not be extended. The Agreements provide that each of
the executive officers will serve the Company in the offices listed (with
respect to named executive officers) in the Summary Compensation Table and set
forth in the Agreements at specified annual base salary rates. The base salaries
are subject to annual reviews by the Compensation Committee, plus annual
incentive bonuses under the Company's management incentive plan at the bonus
"target" rate specified in each Agreement. The Agreements include provisions
that are effective in the event the employment of the executive officer is
terminated by the Company without "cause" or by the executive officer for "good
reason" (each as defined in the Agreements). In such cases, the executive
officer is entitled to severance benefits for the remainder of the agreement
term, including (i) salary, (ii) target bonus payments and (iii) continued
participation in welfare benefit plans, retirement plans and the Company's
401(k) Plan. In such case, stock options awarded prior to the executive
officer's termination without "cause" shall become fully vested and shall remain
exercisable until the earlier of their expiration date or the third anniversary
of the termination of his or her employment. Pursuant to the terms of the
Agreements, the Company will pay each executive officer an amount necessary to
reimburse him or her, on an after tax basis, for any excise tax due under
Section 4999 of the Code as a result of any payment under the Agreements being
treated as a "parachute payment" under Section 280G of the Code. The Agreements
contain a provision relating to nondisclosure of confidential information by the
executive officers. The Agreements are not assignable by either party, but are
binding upon successors of the Company.
February 28, 1995 American Maize-Products Company
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43
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------ ---------------------------------------------------------------------- ------------
(1) -- Agreement and Plan of Merger, dated as of February 22, 1995, among the
Company, Purchaser and Merger Sub.....................................
(2) -- Stock Purchase Agreement, dated February 22, 1995, by and between the
Company, Purchaser and Merger Sub.....................................
(3) -- Confidentiality Agreement, dated January 30, 1995, between the Company
and Purchaser.........................................................
(4) -- Employment Agreement dated January 2, 1995 by and between the Company
and Robert M. Stephan.................................................
(5) -- Employment Agreement dated January 2, 1995 by and between the Company
and Edward P. Norris..................................................
(6) -- Employment Agreement dated January 2, 1995 by and between the Company
and Timothy Mann......................................................
(7) -- Employment Agreement dated January 2, 1995 by and between the Company
and Charles A. Koons..................................................
(8) -- Employment Agreement dated January 2, 1995 by and between the Company
and Michael J. Gorbitz................................................
(9) -- Employment Agreement dated January 2, 1995 by and between the Company
and Jane E. Downey.
(10) -- Employment Agreement dated January 2, 1995 by and between the Company
and Frederick M. Ash..................................................
(11) -- Employment Agreement, dated July 1, 1993 by and between the Company
and Patric J. McLaughlin, and First Amendment to Employment Agreement,
dated January 2, 1995.................................................
(12) -- Letter to shareholders of the Company dated February 28, 1995.*.......
(13) -- Opinion of CS First Boston Corporation dated February 22, 1995.*......
(14) -- Press release issued by the Company on February 22, 1995..............
- ---------------
* Included in copies mailed to stockholders.